Apply the IRC § 21(e)(2)/(4) filing-status rules to Wisconsin, New York, and Hawaii CDCC provisions

changelog.d/fix-state-cdcc-filing-status.fixed.md

@@ -0,0 +1 @@
+Apply the IRC § 21(e)(2) joint-return rule and § 21(e)(4) separated-taxpayer exception to the Wisconsin childcare expense credit (2024+) and subtraction, the New York CDCC, and the Hawaii CDCC, and restrict Hawaii's deemed earned income floor to a spouse who is a student or incapable of self-care.

policyengine_us/tests/policy/baseline/gov/states/hi/tax/income/credits/cdcc/hi_cdcc_eligible.yaml

@@ -13,3 +13,34 @@
     state_code: HI
   output:
     hi_cdcc_eligible: true
+
+- name: Separate filer with a qualifying individual is not eligible, HRS 235-55.6(e)(2)
+  period: 2022
+  input:
+    count_cdcc_eligible: 1
+    filing_status: SEPARATE
+    state_code: HI
+  output:
+    hi_cdcc_eligible: false
+
+- name: Separated filer maintaining a home for a qualifying individual is eligible, HRS 235-55.6(e)(4)
+  period: 2022
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        age: 35
+        is_separated: true
+      person2:
+        age: 5
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: SEPARATE
+        count_cdcc_eligible: 1
+    households:
+      household:
+        members: [person1, person2]
+        state_code: HI
+  output:
+    hi_cdcc_eligible: true

policyengine_us/tests/policy/baseline/gov/states/hi/tax/income/credits/cdcc/hi_cdcc_income_floor_eligible.yaml

@@ -3,10 +3,12 @@
   input:
     people:
       head:
-        is_disabled: true
+        is_tax_unit_head: true
+        is_incapable_of_self_care: true
         is_full_time_student: false
       spouse:
-        is_disabled: false
+        is_tax_unit_spouse: true
+        is_incapable_of_self_care: false
         is_full_time_student: false
     tax_units:
       tax_unit:
@@ -24,10 +26,12 @@
   input:
     people:
       head:
-        is_disabled: true
+        is_tax_unit_head: true
+        is_incapable_of_self_care: true
         is_full_time_student: true
       spouse:
-        is_disabled: false
+        is_tax_unit_spouse: true
+        is_incapable_of_self_care: false
         is_full_time_student: true
     tax_units:
       tax_unit:
@@ -45,10 +49,12 @@
   input:
     people:
       head:
-        is_disabled: false
+        is_tax_unit_head: true
+        is_incapable_of_self_care: false
         is_full_time_student: false
       spouse:
-        is_disabled: false
+        is_tax_unit_spouse: true
+        is_incapable_of_self_care: false
         is_full_time_student: false
     tax_units:
       tax_unit:
@@ -60,3 +66,43 @@
         state_code: HI
   output:
     hi_cdcc_income_floor_eligible: [false, false]
+
+- name: Single filer incapable of self-care is not floor eligible, HRS 235-55.6(d)(2) deems income only for a spouse.
+  period: 2022
+  input:
+    people:
+      head:
+        is_tax_unit_head: true
+        age: 40
+        is_incapable_of_self_care: true
+    tax_units:
+      tax_unit:
+        members: [head]
+        count_cdcc_eligible: 1
+    households:
+      household:
+        members: [head]
+        state_code: HI
+  output:
+    hi_cdcc_income_floor_eligible: false
+
+- name: Disabled spouse who is capable of self-care is not floor eligible.
+  period: 2022
+  input:
+    people:
+      head:
+        is_tax_unit_head: true
+      spouse:
+        is_tax_unit_spouse: true
+        is_disabled: true
+        is_incapable_of_self_care: false
+    tax_units:
+      tax_unit:
+        members: [head, spouse]
+        count_cdcc_eligible: 1
+    households:
+      household:
+        members: [head, spouse]
+        state_code: HI
+  output:
+    hi_cdcc_income_floor_eligible: [false, false]

policyengine_us/tests/policy/baseline/gov/states/hi/tax/income/credits/cdcc/hi_cdcc_integration.yaml

@@ -4,13 +4,13 @@
     people:
       head:
         is_tax_unit_head: true
-        is_disabled: false
+        is_incapable_of_self_care: false
         is_full_time_student: false
         earned_income: 20_000
         dependent_care_employer_benefits: 1_000
       spouse:
         is_tax_unit_spouse: true
-        is_disabled: false
+        is_incapable_of_self_care: false
         is_full_time_student: false
         earned_income: 30_000
         dependent_care_employer_benefits: 2_000
@@ -37,7 +37,7 @@
     people:
       head:
         is_tax_unit_head: true
-        is_disabled: false
+        is_incapable_of_self_care: false
         is_full_time_student: false
         earned_income: 20_000
         dependent_care_employer_benefits: 1_000
@@ -64,13 +64,13 @@
     people:
       head:
         is_tax_unit_head: true
-        is_disabled: false
+        is_incapable_of_self_care: false
         is_full_time_student: false
         earned_income: 20_000
         dependent_care_employer_benefits: 1_000
       spouse:
         is_tax_unit_spouse: true
-        is_disabled: true
+        is_incapable_of_self_care: true
         is_full_time_student: false
         earned_income: 0
         dependent_care_employer_benefits: 0
@@ -97,13 +97,13 @@
     people:
       head:
         is_tax_unit_head: true
-        is_disabled: false
+        is_incapable_of_self_care: false
         is_full_time_student: false
         earned_income: 20_000
         dependent_care_employer_benefits: 5_000
       spouse:
         is_tax_unit_spouse: true
-        is_disabled: true
+        is_incapable_of_self_care: true
         is_full_time_student: false
         earned_income: 0
         dependent_care_employer_benefits: 0
@@ -123,3 +123,26 @@
     hi_cdcc_min_head_spouse_earned: 2_400
     hi_dependent_care_benefits: 0
     hi_cdcc: 0
+
+- name: integration test 5, separate filer is not eligible, HRS 235-55.6(e)(2)
+  period: 2022
+  input:
+    people:
+      head:
+        is_tax_unit_head: true
+        earned_income: 20_000
+        dependent_care_employer_benefits: 1_000
+    tax_units:
+      tax_unit:
+        hi_agi: 19_000
+        filing_status: SEPARATE
+        tax_unit_childcare_expenses: 4_000
+        members: [head]
+        count_cdcc_eligible: 2
+    households:
+      household:
+        members: [head]
+        state_code: HI
+  output:
+    hi_cdcc_eligible: false
+    hi_cdcc: 0

policyengine_us/tests/policy/baseline/gov/states/hi/tax/income/credits/cdcc/hi_cdcc_min_head_spouse_earned.yaml

@@ -113,18 +113,18 @@
   output:
     hi_cdcc_min_head_spouse_earned: 10_000
 
-- name: single, one eligible, one child, income below floor
+- name: single, one child, income below floor, HRS 235-55.6(d)(2) floor never applies to a single filer
   period: 2022
   input:
     people:
       head:
-        is_tax_unit_head_or_spouse: true
+        is_tax_unit_head: true
+        age: 30
         earned_income: 200
-        hi_cdcc_income_floor_eligible: 2_400
+        is_incapable_of_self_care: true
       child:
-        is_tax_unit_head_or_spouse: false
+        age: 10
         earned_income: 100
-        hi_cdcc_income_floor_eligible: 2_400
     tax_units:
       tax_unit:
         members: [head, child]
@@ -133,7 +133,8 @@
         members: [head, child]
         state_code: HI
   output:
-    hi_cdcc_min_head_spouse_earned: 2_400
+    hi_cdcc_income_floor_eligible: [false, false]
+    hi_cdcc_min_head_spouse_earned: 200
 
 - name: married, one eligible, both income below floor
   period: 2022

policyengine_us/tests/policy/baseline/gov/states/ny/tax/income/credits/ny_cdcc.yaml

@@ -7,3 +7,38 @@
     employment_income: 10_000
   output:
     ny_cdcc: 3_850 # From the tax form IT-216.
+
+- name: Separate filer with qualifying individuals gets no credit, IT-216 applies IRC 21(e)(2).
+  period: 2022
+  input:
+    count_cdcc_eligible: 3
+    cdcc_relevant_expenses: 10_000
+    state_code: NY
+    employment_income: 10_000
+    filing_status: SEPARATE
+  output:
+    ny_cdcc: 0
+
+- name: Separated filer maintaining a home for a qualifying child keeps the credit, IRC 21(e)(4).
+  period: 2022
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        age: 35
+        is_separated: true
+        employment_income: 10_000
+      person2:
+        age: 5
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: SEPARATE
+        count_cdcc_eligible: 3
+        cdcc_relevant_expenses: 10_000
+    households:
+      household:
+        members: [person1, person2]
+        state_code: NY
+  output:
+    ny_cdcc: 3_850

policyengine_us/tests/policy/baseline/gov/states/pa/tax/income/credits/pa_cdcc.yaml

@@ -30,3 +30,52 @@
     cdcc_potential: 1_000
   output:
     pa_cdcc: 1_000
+
+- name: Separate filer gets no credit because the federal potential credit is zero, IRC 21(e)(2)
+  period: 2023
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        age: 35
+        employment_income: 45_000
+      person2:
+        age: 5
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: SEPARATE
+        tax_unit_childcare_expenses: 3_000
+    households:
+      household:
+        members: [person1, person2]
+        state_code: PA
+  output:
+    cdcc_potential: 0
+    pa_cdcc: 0
+
+- name: Separated filer maintaining a home for a qualifying child keeps the credit, IRC 21(e)(4)
+  period: 2023
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        age: 35
+        employment_income: 45_000
+        is_separated: true
+      person2:
+        age: 5
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: SEPARATE
+        tax_unit_childcare_expenses: 3_000
+    households:
+      household:
+        members: [person1, person2]
+        state_code: PA
+  output:
+    # cdcc_relevant_expenses = min(3000, 3000 cap, 45000 earned) = 3000
+    # cdcc_rate at 45k AGI = 20% floor; potential = 600; PA match 100% in 2023
+    cdcc_potential: 600
+    pa_cdcc: 600

policyengine_us/tests/policy/baseline/gov/states/wi/tax/income/wi_childcare_expense_credit.yaml

@@ -124,3 +124,58 @@
         members: [head, child]
   output:
     wi_childcare_expense_credit_potential: 2_000 # min(12000, 10000) * 0.20 * 1.0
+
+- name: WI CDCC 2024 separate filer is not eligible per Wis. Stat. 71.07(9g)(c)4.
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    people:
+      head:
+        is_tax_unit_head: true
+        age: 35
+        employment_income: 60_000
+      child:
+        age: 5
+    tax_units:
+      tax_unit:
+        members: [head, child]
+        filing_status: SEPARATE
+        tax_unit_childcare_expenses: 2_000
+        adjusted_gross_income: 60_000
+    households:
+      household:
+        members: [head, child]
+        state_code: WI
+    spm_units:
+      spm_unit:
+        members: [head, child]
+  output:
+    wi_childcare_expense_credit_potential: 0
+
+- name: WI CDCC 2024 separated filer maintaining a home for a qualifying child keeps the credit, IRC 21(e)(4)
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    people:
+      head:
+        is_tax_unit_head: true
+        age: 35
+        employment_income: 60_000
+        is_separated: true
+      child:
+        age: 5
+    tax_units:
+      tax_unit:
+        members: [head, child]
+        filing_status: SEPARATE
+        tax_unit_childcare_expenses: 2_000
+        adjusted_gross_income: 60_000
+    households:
+      household:
+        members: [head, child]
+        state_code: WI
+    spm_units:
+      spm_unit:
+        members: [head, child]
+  output:
+    wi_childcare_expense_credit_potential: 400 # 2000 * 0.20 * 1.0