Count every co-resident's income in the Arizona property tax credit

changelog.d/az-ptc-household-income.fixed.md

@@ -0,0 +1 @@
+Count the income of everyone living in an Arizona property tax credit claimant's home, allow one claimant per household, exclude Arizona unemployment, count other states' unemployment, nontaxable strike benefits and nontaxable alimony, and stop subtracting federal above-the-line deductions other than business and capital losses.

policyengine_us/parameters/gov/states/az/tax/income/credits/property_tax/income_sources.yaml

@@ -1,4 +1,4 @@
-description: Arizona accounts for the following income sources when computing household income for the property tax credit.
+description: Arizona accounts for the following income sources of each tax unit's members when computing household income for the property tax credit.
 values:
   2021-01-01:
     # Item (2): All interest income including tax-exempt
@@ -7,7 +7,12 @@ values:
     # (taxable pension is already in Federal AGI via az_property_tax_credit_agi)
     - tax_exempt_public_pension_income
     - tax_exempt_private_pension_income
-    # Federal AGI minus Social Security (per ARS 43-1072(I) exclusion).
+    # Federal AGI minus Social Security (per ARS 43-1072(I) exclusion), with
+    # federal above-the-line deductions other than loss_ald added back:
+    # A.A.C. R15-2C-502(A)(1) counts "the sum of all income not specifically
+    # excluded in A.R.S. § 43-1072", and Form 140PTC lines A to I subtract no
+    # adjustment (ruling us-az:ptc-above-the-line-deductions). loss_ald stays
+    # subtracted for its business losses; its capital part is replaced below.
     # Item (7) capital gains and losses (Form 140PTC Part 1 line D) are counted
     # here, once, for members who are not dependents: federal AGI's net capital
     # gain and capital loss deduction (limited to $3,000 per return) are
@@ -27,6 +32,14 @@ values:
     # (A.A.C. R15-2C-502(A)(2), (B)). This includes each dependent's line D
     # amount, with the same $1,500 loss limit.
     - az_property_tax_credit_dependent_income
+    # ARS 43-1072(I) excludes Arizona unemployment insurance payments, which
+    # the two variables above take out; Form 140PTC line I counts other
+    # states' payments.
+    - az_property_tax_credit_unemployment
+    # Line H counts all alimony received and line I nontaxable strike
+    # benefits (ARS 43-1072(H)(6)(c)); this adds the part federal gross
+    # income leaves out, for every member.
+    - az_property_tax_credit_nontaxable_income
 metadata:
   unit: list
   period: year

policyengine_us/tests/policy/baseline/gov/states/az/tax/income/az_property_tax_credit_agi.yaml

@@ -104,3 +104,85 @@
     # Only the head's line A wages. The dependent's line D (1,500) is in
     # az_property_tax_credit_dependent_income.
     az_property_tax_credit_agi: 3_000
+
+# Ruling us-az:ptc-above-the-line-deductions: household income does not
+# subtract federal above-the-line deductions other than the business and
+# capital loss deduction. A.A.C. R15-2C-502(A)(1) counts "the sum of all
+# income not specifically excluded in A.R.S. § 43-1072", and Form 140PTC
+# Part 1 lines A to I subtract no adjustment. 2025 Table 1 (ARS
+# 43-1072(B)(1)): 2,951 - 3,050 -> 212; property taxes 0.15 x 6,000 = 900.
+
+- name: A student loan interest deduction does not reduce household income
+  period: 2025
+  input:
+    people:
+      head:
+        age: 70
+        employment_income: 3_000
+        student_loan_interest: 1_000
+        rent: 6_000
+    tax_units:
+      tax_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: AZ
+  output:
+    student_loan_interest_ald: 1_000
+    # Federal AGI: 3,000 - 1,000.
+    adjusted_gross_income: 2_000
+    # 2,000 + 1,000 added back. Without the add-back, 2,000 -> Table 1
+    # 1,951 - 2,050 -> 435.
+    az_property_tax_credit_agi: 3_000
+    az_property_tax_credit_household_income: 3_000
+    az_property_tax_credit: 212
+
+- name: Half of self-employment tax does not reduce household income
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 70
+        self_employment_income: 3_000
+        rent: 6_000
+    tax_units:
+      tax_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: AZ
+  output:
+    # 3,000 x 0.9235 = 2,770.50; x 0.153 = 423.89; half = 211.94.
+    self_employment_tax_ald: 211.94
+    adjusted_gross_income: 2_788.06
+    az_property_tax_credit_agi: 3_000
+    az_property_tax_credit_household_income: 3_000
+    az_property_tax_credit: 212
+
+- name: A Schedule C loss still reduces household income
+  period: 2025
+  input:
+    people:
+      head:
+        age: 70
+        employment_income: 4_000
+        self_employment_income: -1_000
+        rent: 6_000
+    tax_units:
+      tax_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: AZ
+  output:
+    # loss_ald carries the business loss, which ITR 12-1 items (3) to (5)
+    # count; it is not added back.
+    loss_ald: 1_000
+    adjusted_gross_income: 3_000
+    az_property_tax_credit_agi: 3_000
+    az_property_tax_credit_household_income: 3_000
+    az_property_tax_credit: 212

policyengine_us/tests/policy/baseline/gov/states/az/tax/income/credits/az_property_tax_credit.yaml

@@ -164,3 +164,29 @@
     # Line 11a: Schedule 1, 0 - 1,750 -> 502.
     # Line 13: 0.15 x 4,000 = 600. Line 15: smaller of 502 and 600.
     az_property_tax_credit: 502
+
+- name: A co-resident's rent does not make a claimant who paid none eligible
+  period: 2025
+  input:
+    people:
+      parent:
+        age: 70
+      roommate:
+        age: 40
+        rent: 6_000
+    tax_units:
+      parent_unit:
+        members: [parent]
+      roommate_unit:
+        members: [roommate]
+    households:
+      household:
+        members: [parent, roommate]
+        state_code: AZ
+  output:
+    # Ruling us-az:ptc-rent-and-taxes-shared-home: ARS 43-1072(A)(2) requires
+    # that the claimant "paid either property taxes or rent", and Form 201
+    # line 13 enters "the total rents you paid". The parent paid none; the
+    # roommate is under 65.
+    az_property_tax_credit_eligible: [false, false]
+    az_property_tax_credit: [0, 0]

policyengine_us/tests/policy/baseline/gov/states/az/tax/income/credits/az_property_tax_credit_claimant.yaml

@@ -0,0 +1,155 @@
+# ARS 43-1072(G): "Only one claimant per household per year shall be entitled
+# to a tax credit." Under (H)(1) qualifying members choose the claimant; the
+# model picks the tax unit with the largest claim.
+
+- name: Two qualifying roommates, the larger claim gets the credit
+  period: 2025
+  input:
+    people:
+      roommate_a:
+        age: 68
+        employment_income: 1_000
+        rent: 6_000
+      roommate_b:
+        age: 68
+        employment_income: 500
+        rent: 2_000
+    tax_units:
+      unit_a:
+        members: [roommate_a]
+      unit_b:
+        members: [roommate_b]
+    households:
+      household:
+        members: [roommate_a, roommate_b]
+        state_code: AZ
+  output:
+    az_property_tax_credit_household_income: 1_500
+    az_property_tax_credit_eligible: [true, true]
+    # Table 2, 0 - 2,500 -> 502. A: min(502, 900) = 502; B: min(502, 300) = 300.
+    az_property_tax_credit_potential: [502, 300]
+    az_property_tax_credit_claimant: [true, false]
+    az_property_tax_credit: [502, 0]
+
+- name: The larger claim wins whatever the member order
+  period: 2025
+  input:
+    people:
+      roommate_b:
+        age: 68
+        employment_income: 500
+        rent: 2_000
+      roommate_a:
+        age: 68
+        employment_income: 1_000
+        rent: 6_000
+    tax_units:
+      unit_b:
+        members: [roommate_b]
+      unit_a:
+        members: [roommate_a]
+    households:
+      household:
+        members: [roommate_b, roommate_a]
+        state_code: AZ
+  output:
+    az_property_tax_credit_potential: [300, 502]
+    az_property_tax_credit: [0, 502]
+
+- name: A tie goes to the tax unit whose head comes first in the person order
+  period: 2025
+  input:
+    people:
+      roommate_a:
+        age: 68
+        rent: 6_000
+      roommate_b:
+        age: 68
+        rent: 6_000
+    tax_units:
+      unit_a:
+        members: [roommate_a]
+      unit_b:
+        members: [roommate_b]
+    households:
+      household:
+        members: [roommate_a, roommate_b]
+        state_code: AZ
+  output:
+    az_property_tax_credit_potential: [502, 502]
+    az_property_tax_credit: [502, 0]
+
+- name: A tie goes to the tax unit holding the household head
+  period: 2025
+  input:
+    people:
+      roommate_a:
+        age: 68
+        rent: 6_000
+      roommate_b:
+        age: 68
+        rent: 6_000
+        is_household_head: true
+    tax_units:
+      unit_a:
+        members: [roommate_a]
+      unit_b:
+        members: [roommate_b]
+    households:
+      household:
+        members: [roommate_a, roommate_b]
+        state_code: AZ
+  output:
+    az_property_tax_credit_potential: [502, 502]
+    az_property_tax_credit: [0, 502]
+
+- name: Separate households each keep a claimant
+  period: 2025
+  input:
+    people:
+      person_a:
+        age: 68
+        rent: 6_000
+      person_b:
+        age: 68
+        rent: 2_000
+    tax_units:
+      unit_a:
+        members: [person_a]
+      unit_b:
+        members: [person_b]
+    households:
+      household_a:
+        members: [person_a]
+        state_code: AZ
+      household_b:
+        members: [person_b]
+        state_code: AZ
+  output:
+    # Table 1 at zero income: 502. B: min(502, 300) = 300.
+    az_property_tax_credit: [502, 300]
+
+- name: An ineligible co-resident is never the claimant
+  period: 2025
+  input:
+    people:
+      parent:
+        age: 70
+        rent: 1_000
+      son:
+        age: 40
+        rent: 6_000
+    tax_units:
+      parent_unit:
+        members: [parent]
+      son_unit:
+        members: [son]
+    households:
+      household:
+        members: [parent, son]
+        state_code: AZ
+  output:
+    az_property_tax_credit_eligible: [true, false]
+    # Parent: min(502, 0.15 x 1,000 = 150) = 150.
+    az_property_tax_credit_claimant: [true, false]
+    az_property_tax_credit: [150, 0]