diff --git a/changelog.d/ak-energy-relief-gross-income.fixed.md b/changelog.d/ak-energy-relief-gross-income.fixed.md new file mode 100644 index 00000000000..006531e3039 --- /dev/null +++ b/changelog.d/ak-energy-relief-gross-income.fixed.md @@ -0,0 +1 @@ +Count Alaska's energy relief payment in federal gross income from 2024 on, through a new `taxable_ak_energy_relief` source (#9919). In Publication 525 for 2024, the IRS treats the entire $1,702 dividend as taxable, including the energy relief. The Permanent Fund Dividend Division says the same of the $1,200 dividend for 2026. Payments from the 2022 program stay out, whether recipients got them in 2022 or in 2023. In IR-2023-23, the IRS said it would not challenge a taxpayer who left out a payment that Alaska made in 2022. In section 4.03 of Notice 2023-56, it let a taxpayer who got nothing under the program in 2022 exclude a payment they got in 2023. A payment that a dataset or user supplies counts wherever the recipient lives. diff --git a/docs/validation/alaska-pfd.md b/docs/validation/alaska-pfd.md index 6182b4f133e..77755c51f44 100644 --- a/docs/validation/alaska-pfd.md +++ b/docs/validation/alaska-pfd.md @@ -53,8 +53,14 @@ the components and increase the modeled taxable amount. The split is described in [Alaska DOR's February 17, 2023 release](https://dor.alaska.gov/docs/default-source/press-releases/2023_02_17-dor-response-to-irs-guidance-on-2022-pfd.pdf#page=1). -The model excludes the separate energy payment from federal gross income. For -2022, this follows [IRS IR-2023-23, including its Alaska +## Energy relief in federal gross income + +`taxable_ak_energy_relief` holds the part of `ak_energy_relief` in federal gross +income, and `gov.irs.gross_income.ak_energy_relief_excluded` sets that part by +year. + +The model leaves the 2022 program's payment out. This follows [IRS IR-2023-23, +including its Alaska footnote](https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers): the IRS said it would not challenge exclusion of the supplemental energy payment, while the regular PFD remained taxable. This was a 2022 administrative @@ -62,4 +68,44 @@ nonchallenge policy, rather than a statutory determination for every recipient. An exclusion under IRC 139 depends on a qualifying disaster and the connection between the payment and that disaster; see [Notice 2023-56, section 3.04](https://www.irs.gov/pub/irs-drop/n-23-56.pdf#page=6). This model convention -does not establish those facts or extend the 2022 IRS policy to other years. +does not establish those facts. + +The model also leaves out a payment from the 2022 program that a recipient got +in 2023. In +[section 4.03 of Notice 2023-56](https://www.irs.gov/pub/irs-drop/n-23-56.pdf#page=13), +the IRS addresses the 2022 programs that the news release covered. It lets a +taxpayer who got nothing under such a program in 2022 exclude a payment that +they got under it in 2023. It repeats the rule in +[Publication 525 for 2023](https://www.irs.gov/pub/irs-prior/p525--2023.pdf#page=37). + +Alaska paid the 2022 program's energy relief as part of +[one \$3,284 disbursement per eligible Alaskan](https://dor.alaska.gov/docs/default-source/press-releases/2023_02_17-dor-response-to-irs-guidance-on-2022-pfd.pdf#page=1), +so a recipient who got it in 2023 got nothing under the program in 2022. Alaska +paid the \$1,312 dividend for 2023 from the dividend fund's balance and the +Permanent Fund's earnings, with no energy relief +([PFD Division annual report for 2023](https://dor.alaska.gov/docs/permanentfunddividendlibraries/annual-reports/2023-pfd-annual-report.pdf?sfvrsn=6f6d9c6c_1#page=4), +page 4). It paid the relief that the Legislature +[added in 2023](https://dor.alaska.gov/department-of-revenue/news-detail/2024/09/19/department-of-revenue-announces-2024-permanent-fund-dividend-amount-and-energy-relief) +with the 2024 dividend, using \$190.3 million from the general fund +([annual report for 2024](https://dor.alaska.gov/docs/permanentfunddividendlibraries/annual-reports/2024-pfd-annual-report.pdf?sfvrsn=214f2751_1#page=4), +page 4). So every energy relief payment that a recipient got in 2023 came from +the 2022 program, and the model leaves all of them out. + +The model counts every payment from 2024 on. In +[section 2 of Notice 2023-56](https://www.irs.gov/pub/irs-drop/n-23-56.pdf#page=2), +the IRS says the news release applied only to payments that states made in +2022. In section 4.03, it adds only 2023 payments under 2022 programs. In +[Publication 525 for 2024](https://www.irs.gov/pub/irs-prior/p525--2024.pdf#page=32), +the IRS tells filers not to reduce Schedule 1 line 8g by the energy relief +portion and treats the entire \$1,702 as taxable. The model's \$1,403.83 of PFD +and \$298.17 of energy relief add up to that. The +[PFD Division](https://pfd.alaska.gov/payments/tax-information) says the \$1,200 +dividend for 2026 includes the energy relief payment, and that dividends for +adults "are taxable for federal income tax purposes". The model's \$1,000 and +\$200 add up to that, so an Alaskan adult with \$50,000 of wages has federal AGI +of \$51,200 in 2026. + +A payment counts wherever the recipient lives, though the model calculates +`ak_energy_relief` only for Alaska residents. When a dataset or user supplies +energy relief or a regular dividend for someone who has since moved, the amount +stays in federal gross income. diff --git a/policyengine_us/parameters/gov/irs/gross_income/ak_energy_relief_excluded.yaml b/policyengine_us/parameters/gov/irs/gross_income/ak_energy_relief_excluded.yaml new file mode 100644 index 00000000000..76e327d5f21 --- /dev/null +++ b/policyengine_us/parameters/gov/irs/gross_income/ak_energy_relief_excluded.yaml @@ -0,0 +1,48 @@ +description: Taxpayers leave Alaska's energy relief payment out of federal gross income, if this is true. + +values: + 2022-01-01: true + # Alaska paid no energy relief with the 2023 dividend. It paid the relief that + # the Legislature added in 2023 with the 2024 dividend, so any payment that a + # recipient got in 2023 came from the 2022 program. Alaska paid that program's + # relief as part of one disbursement per eligible Alaskan, so a recipient who + # got it in 2023 got nothing under the program in 2022. In section 4.03 of + # Notice 2023-56, the IRS lets that taxpayer exclude the payment. + 2024-01-01: false + +metadata: + unit: bool + period: year + label: Alaska energy relief payment excluded from gross income + reference: + # The 2022 payment, footnote 1. + - title: IRS News Release IR-2023-23, IRS issues guidance on state tax payments to help taxpayers + href: https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers + # Alaska paid the 2022 program's relief as part of one disbursement per + # eligible Alaskan. + - title: Alaska Department of Revenue, DOR Response to IRS Guidance on 2022 PFD + href: https://dor.alaska.gov/docs/default-source/press-releases/2023_02_17-dor-response-to-irs-guidance-on-2022-pfd.pdf#page=1 + # Section 2: the news release applied only to payments that states made in + # 2022. + - title: IRS Notice 2023-56, Federal Income Tax Consequences of Certain State Payments, section 2 + href: https://www.irs.gov/pub/irs-drop/n-23-56.pdf#page=2 + # Section 4.03: a taxpayer who got no payment under a 2022 program that the + # news release covered may exclude a payment under it that they got in 2023. + - title: IRS Notice 2023-56, Federal Income Tax Consequences of Certain State Payments, section 4.03 + href: https://www.irs.gov/pub/irs-drop/n-23-56.pdf#page=13 + - title: IRS Publication 525 (2023), Spillover payments under certain 2022 state tax payment programs + href: https://www.irs.gov/pub/irs-prior/p525--2023.pdf#page=37 + # Page 4: Alaska paid the 2023 dividend from the dividend fund's balance and + # the Permanent Fund's earnings, with no energy relief. + - title: Alaska Permanent Fund Dividend Division, Annual Report 2023, dividend calculation + href: https://dor.alaska.gov/docs/permanentfunddividendlibraries/annual-reports/2023-pfd-annual-report.pdf?sfvrsn=6f6d9c6c_1#page=4 + # Alaska paid the relief that the Legislature added in 2023 with the 2024 + # dividend. + - title: Alaska Department of Revenue, Department of Revenue Announces 2024 Permanent Fund Dividend Amount and Energy Relief + href: https://dor.alaska.gov/department-of-revenue/news-detail/2024/09/19/department-of-revenue-announces-2024-permanent-fund-dividend-amount-and-energy-relief + # The 2024 payment. + - title: IRS Publication 525 (2024), Taxable and Nontaxable Income + href: https://www.irs.gov/pub/irs-prior/p525--2024.pdf#page=32 + # The 2026 payment. + - title: Alaska Permanent Fund Dividend Division, Tax Information + href: https://pfd.alaska.gov/payments/tax-information diff --git a/policyengine_us/parameters/gov/irs/gross_income/sources.yaml b/policyengine_us/parameters/gov/irs/gross_income/sources.yaml index a2474e69e74..eaf56ca1d5c 100644 --- a/policyengine_us/parameters/gov/irs/gross_income/sources.yaml +++ b/policyengine_us/parameters/gov/irs/gross_income/sources.yaml @@ -41,6 +41,8 @@ values: - miscellaneous_income # Listed separately on 1040 line 8g. - ak_permanent_fund_dividend + # Reported with the dividend on line 8g, except the 2022 payment. + - taxable_ak_energy_relief # Alimony from divorces executed before the TCJA cutoff (Schedule 1 line 2a). - taxable_alimony_income # Taxable state and local income tax refunds (Schedule 1 line 1 / IRC ยง 111). diff --git a/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/taxable_ak_energy_relief.yaml b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/taxable_ak_energy_relief.yaml new file mode 100644 index 00000000000..25ec90f291f --- /dev/null +++ b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/taxable_ak_energy_relief.yaml @@ -0,0 +1,217 @@ +- name: Case 1, the 2022 payment stays out of gross income (IR-2023-23, footnote 1). + period: 2022 + input: + state_code: AK + output: + ak_energy_relief: 662 + taxable_ak_energy_relief: 0 + +- name: Case 2, the 2024 payment counts in full (Publication 525 for 2024). + period: 2024 + absolute_error_margin: 0.01 + input: + state_code: AK + output: + ak_energy_relief: 298.17 + taxable_ak_energy_relief: 298.17 + +- name: Case 3, Alaska paid no energy relief in 2025. + period: 2025 + input: + state_code: AK + output: + ak_energy_relief: 0 + taxable_ak_energy_relief: 0 + +- name: Case 4, the 2026 payment counts in full (PFD Division tax information). + period: 2026 + input: + state_code: AK + output: + ak_energy_relief: 200 + taxable_ak_energy_relief: 200 + +- name: Case 5, the model calculates no payment for someone living outside Alaska. + period: 2026 + input: + state_code: WA + output: + ak_energy_relief: 0 + taxable_ak_energy_relief: 0 + +- name: Case 6, a 2022 payment that a user supplies stays out. + period: 2022 + input: + state_code: AK + ak_energy_relief: 1_000 + output: + taxable_ak_energy_relief: 0 + +- name: Case 7, a 2026 payment that a user supplies counts in full. + period: 2026 + input: + state_code: AK + ak_energy_relief: 1_000 + output: + taxable_ak_energy_relief: 1_000 + +- name: Case 8, nothing counts before 2022. + period: 2021 + input: + state_code: AK + output: + taxable_ak_energy_relief: 0 + +- name: Case 9, a 2022 filer reports the $2,622 regular dividend and not the $662 payment. + period: 2022 + input: + people: + person: + age: 40 + employment_income: 50_000 + tax_units: + tax_unit: + members: [person] + households: + household: + members: [person] + state_code: AK + output: + ak_permanent_fund_dividend: 2_622 + taxable_ak_energy_relief: 0 + irs_gross_income: 52_622 + adjusted_gross_income: 52_622 + +- name: Case 10, a 2024 filer reports the entire $1,702 from Publication 525. + period: 2024 + absolute_error_margin: 0.01 + input: + people: + person: + age: 40 + employment_income: 50_000 + tax_units: + tax_unit: + members: [person] + households: + household: + members: [person] + state_code: AK + output: + ak_permanent_fund_dividend: 1_403.83 + taxable_ak_energy_relief: 298.17 + irs_gross_income: 51_702 + adjusted_gross_income: 51_702 + +- name: Case 11, a 2025 filer reports the $1,000 dividend, which held no energy relief. + period: 2025 + input: + people: + person: + age: 40 + employment_income: 50_000 + tax_units: + tax_unit: + members: [person] + households: + household: + members: [person] + state_code: AK + output: + ak_permanent_fund_dividend: 1_000 + taxable_ak_energy_relief: 0 + irs_gross_income: 51_000 + adjusted_gross_income: 51_000 + +- name: Case 12, a 2026 filer reports the $1,200 dividend and pays tax on all of it. + period: 2026 + input: + people: + person: + age: 40 + employment_income: 50_000 + tax_units: + tax_unit: + members: [person] + households: + household: + members: [person] + state_code: AK + output: + ak_permanent_fund_dividend: 1_000 + taxable_ak_energy_relief: 200 + irs_gross_income: 51_200 + adjusted_gross_income: 51_200 + # Rev. Proc. 2025-32: taxable income of 51,200 - 16,100 = 35,100. + # 10% of 12,400 + 12% of (35,100 - 12,400) = 1,240 + 2,724. + income_tax: 3_964 + +- name: Case 13, a dependent child's 2026 dividend counts as the child's own gross income. + period: 2026 + input: + people: + parent: + age: 40 + employment_income: 50_000 + child: + age: 5 + tax_units: + tax_unit: + members: [parent, child] + households: + household: + members: [parent, child] + state_code: AK + output: + is_tax_unit_dependent: [false, true] + taxable_ak_energy_relief: [200, 200] + irs_gross_income: [51_200, 0] + dependent_gross_income: [0, 1_200] + +- name: Case 14, Alaska paid no energy relief with the 2023 dividend. + period: 2023 + input: + state_code: AK + output: + ak_energy_relief: 0 + taxable_ak_energy_relief: 0 + +- name: Case 15, a 2022-program payment that the recipient got in 2023 stays out (Notice 2023-56, section 4.03). + period: 2023 + input: + people: + person: + age: 40 + employment_income: 50_000 + ak_energy_relief: 662 + tax_units: + tax_unit: + members: [person] + households: + household: + members: [person] + state_code: AK + output: + taxable_ak_energy_relief: 0 + # 50,000 of wages and the $1,312 regular dividend for 2023. + irs_gross_income: 51_312 + +- name: Case 16, a 2026 payment and dividend that a user supplies count for a recipient who now lives outside Alaska. + period: 2026 + input: + people: + person: + age: 40 + employment_income: 50_000 + ak_permanent_fund_dividend: 1_000 + ak_energy_relief: 200 + tax_units: + tax_unit: + members: [person] + households: + household: + members: [person] + state_code: WA + output: + taxable_ak_energy_relief: 200 + irs_gross_income: 51_200 diff --git a/policyengine_us/tests/test_ak_energy_relief_gross_income.py b/policyengine_us/tests/test_ak_energy_relief_gross_income.py new file mode 100644 index 00000000000..d763e14dff0 --- /dev/null +++ b/policyengine_us/tests/test_ak_energy_relief_gross_income.py @@ -0,0 +1,108 @@ +"""Invariants for Alaska's energy relief payment in federal gross income. + +1. From 2024 on, taxable_ak_energy_relief equals a payment that a dataset or + user supplies, wherever the recipient lives, and in 2022 and 2023 it holds + zero (IR-2023-23, footnote 1; Notice 2023-56, section 4.03). For a single + filer with no income but wages, irs_gross_income rises by the same amount. + Social Security that the payment makes taxable adds to the rise. +2. For a single Alaskan with $500,000 of wages, the tax on the payment stays + below the payment, and household and SPM net income each rise by what + remains. Below that income, the tax on a small payment can exceed the + payment when the payment ends a deduction or credit. A smaller premium tax + credit also raises a Marketplace enrollee's SPM expenses. + +YAML pins the amounts that the IRS and Alaska publish for each year, and that +the model calculates no payment for anyone outside Alaska. These tests draw +amounts, years and states beyond the sources' examples, and they compare two +simulations of one household. +""" + +import pytest +from hypothesis import example, given, settings +from hypothesis import strategies as st + +from policyengine_us import Simulation + +YEARS = (2022, 2023, 2024, 2025, 2026) +# Recipients got the 2022 program's payments in 2022 or 2023, and the model +# leaves out energy relief from both years (IR-2023-23; Notice 2023-56, section +# 4.03). Alaska paid no energy relief with the 2023 dividend and paid the relief +# the Legislature added in 2023 with the 2024 dividend. +EXCLUDED_YEARS = (2022, 2023) +STATES = ("AK", "HI", "TX", "WA") +# 32-bit floats resolve to $0.03125 at this income, and the net income formulas +# round several times, so a change can differ from its components by a few cents. +TOLERANCE = 0.25 +# Earnings this high rule out every means-tested response. +HIGH_EARNINGS = 500_000 +NET_INCOMES = ("household_net_income", "spm_unit_net_income") + + +def one_person(state, year, earnings, payment): + members = ["you"] + return { + "people": { + "you": { + "age": {year: 40}, + "employment_income": {year: earnings}, + "ak_energy_relief": {year: payment}, + } + }, + "tax_units": {"tax_unit": {"members": members}}, + "spm_units": {"spm_unit": {"members": members}}, + "families": {"family": {"members": members}}, + "marital_units": {"marital_unit": {"members": members}}, + "households": {"household": {"members": members, "state_name": {year: state}}}, + } + + +def calculate(simulation, name, year): + return float(simulation.calculate(name, year).sum()) + + +@settings(max_examples=10, deadline=None) +@example(state="AK", year=2022, earnings=50_000, payment=662) +@example(state="AK", year=2023, earnings=50_000, payment=662) +@example(state="AK", year=2024, earnings=50_000, payment=298) +@example(state="WA", year=2026, earnings=50_000, payment=200) +@example(state="TX", year=2026, earnings=0, payment=200) +@given( + state=st.sampled_from(STATES), + year=st.sampled_from(YEARS), + earnings=st.integers(min_value=0, max_value=300_000), + payment=st.integers(min_value=1, max_value=30_000), +) +def test_gross_income_counts_the_payment_wherever_the_recipient_lives( + state, year, earnings, payment +): + without = Simulation(situation=one_person(state, year, earnings, 0)) + paid = Simulation(situation=one_person(state, year, earnings, payment)) + expected = 0 if year in EXCLUDED_YEARS else payment + taxable = calculate(paid, "taxable_ak_energy_relief", year) + change = calculate(paid, "irs_gross_income", year) - calculate( + without, "irs_gross_income", year + ) + assert taxable == pytest.approx(expected, abs=TOLERANCE) + assert change == pytest.approx(expected, abs=TOLERANCE) + + +@settings(max_examples=10, deadline=None) +@example(year=2022, payment=662) +@example(year=2023, payment=662) +@example(year=2024, payment=298) +@example(year=2026, payment=200) +@given( + year=st.sampled_from(YEARS), + payment=st.integers(min_value=1, max_value=30_000), +) +def test_net_incomes_rise_by_the_payment_less_its_tax(year, payment): + without = Simulation(situation=one_person("AK", year, HIGH_EARNINGS, 0)) + paid = Simulation(situation=one_person("AK", year, HIGH_EARNINGS, payment)) + tax = calculate(paid, "income_tax", year) - calculate(without, "income_tax", year) + if year in EXCLUDED_YEARS: + assert tax == pytest.approx(0, abs=TOLERANCE) + else: + assert 0 < tax < payment + for name in NET_INCOMES: + change = calculate(paid, name, year) - calculate(without, name, year) + assert change == pytest.approx(payment - tax, abs=TOLERANCE), name diff --git a/policyengine_us/tests/test_household_spm_resource_parity.py b/policyengine_us/tests/test_household_spm_resource_parity.py index 165d3b89f10..87cdf70f590 100644 --- a/policyengine_us/tests/test_household_spm_resource_parity.py +++ b/policyengine_us/tests/test_household_spm_resource_parity.py @@ -109,6 +109,7 @@ "taxable_retirement_distributions": "retirement_distributions", "miscellaneous_income": "miscellaneous_income", "ak_permanent_fund_dividend": "ak_permanent_fund_dividend", + "taxable_ak_energy_relief": "ak_energy_relief", "taxable_alimony_income": "alimony_income", "military_retirement_income": "military_retirement_income", } diff --git a/policyengine_us/variables/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/taxable_ak_energy_relief.py b/policyengine_us/variables/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/taxable_ak_energy_relief.py new file mode 100644 index 00000000000..098818330e6 --- /dev/null +++ b/policyengine_us/variables/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/taxable_ak_energy_relief.py @@ -0,0 +1,38 @@ +from policyengine_us.model_api import * + + +class taxable_ak_energy_relief(Variable): + value_type = float + entity = Person + label = "Alaska energy relief payment in gross income" + unit = USD + documentation = ( + "The part of ak_energy_relief in federal gross income. It holds none " + "of a payment from the 2022 program, which the IRS lets recipients " + "exclude whether they got it in 2022 or in 2023. It holds all of each " + "payment from 2024 on, which Alaska pays as part of the taxable " + "dividend. Like a regular dividend, a payment that a dataset or user " + "supplies counts wherever the recipient lives. See " + "docs/validation/alaska-pfd.md." + ) + definition_period = YEAR + reference = ( + "https://www.law.cornell.edu/uscode/text/26/61", + "https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers", + "https://www.irs.gov/pub/irs-drop/n-23-56.pdf#page=2", + "https://www.irs.gov/pub/irs-drop/n-23-56.pdf#page=13", + "https://www.irs.gov/pub/irs-prior/p525--2023.pdf#page=37", + "https://www.irs.gov/pub/irs-prior/p525--2024.pdf#page=32", + "https://pfd.alaska.gov/payments/tax-information", + ) + + def formula(person, period, parameters): + # No defined_for: ak_energy_relief computes nothing for people who live + # outside Alaska, and when a dataset or user supplies a payment for + # someone who has since moved, the payment stays in gross income. + p = parameters(period).gov.irs.gross_income + return where( + p.ak_energy_relief_excluded, + 0, + person("ak_energy_relief", period), + ) diff --git a/policyengine_us/variables/gov/states/ak/dor/ak_energy_relief.py b/policyengine_us/variables/gov/states/ak/dor/ak_energy_relief.py index 845c9a3efc3..466f7db6b3c 100644 --- a/policyengine_us/variables/gov/states/ak/dor/ak_energy_relief.py +++ b/policyengine_us/variables/gov/states/ak/dor/ak_energy_relief.py @@ -13,9 +13,9 @@ class ak_energy_relief(Variable): "person-level variable directly; excluding both Alaska transfers " "requires also overriding ak_permanent_fund_dividend for each person. " "The rounded 2022 energy payment is $662, separate from the $2,622 " - "regular PFD. Its exclusion from federal gross income follows the " - "IRS's 2022 nonchallenge convention, which does not establish a " - "statutory disaster-relief exclusion for every recipient or year. " + "regular PFD. taxable_ak_energy_relief holds the part in federal gross " + "income: none of a 2022-program payment, which the IRS lets recipients " + "exclude in 2022 or 2023, and all of each payment from 2024 on. " "See docs/validation/alaska-pfd.md." ) unit = USD diff --git a/source_conflicts/candidates.yaml b/source_conflicts/candidates.yaml index 12772c7bdde..fcb95c7a1e2 100644 --- a/source_conflicts/candidates.yaml +++ b/source_conflicts/candidates.yaml @@ -6758,8 +6758,9 @@ candidates: years: from: 2025 type: tax - question: Does the renter's refund count disability benefits from an employer-paid plan, when the Tax Commissioner's - guideline lists insurance policy proceeds for illness, injury or dismemberment among items that are not income? + question: Does the renter's refund count wage-replacement disability benefits from an employer-paid plan, when the Tax + Commissioner's guideline lists insurance policy proceeds for illness, injury or dismemberment among items that are + not income? sources: - kind: statute citation: N.D.C.C. 57-02-08.1(5)(c) @@ -6768,12 +6769,13 @@ candidates: citation: Property Tax Credits for North Dakota Homeowners and Renters, item 11 url: https://www.tax.nd.gov/sites/www/files/documents/guidelines/homestead-veterans-renters/credits-for-nd-homeowners-renters-guideline.pdf#page=2 readings: - statute: Income comes from all sources and leaves out any amount excluded from income by federal or state law. - Federal law excludes benefits from a plan the recipient paid for (IRC 104(a)(3)) and counts benefits from a plan - the employer paid for (IRC 105(a)). + statute: Income comes from all sources and leaves out any amount that federal or state law excludes from income. + Federal law excludes benefits from a plan the recipient paid for (IRC 104(a)(3)). It counts benefits from a plan + the employer paid for (IRC 105(a)), other than the medical reimbursements and permanent-injury payments that IRC + 105(b) and (c) exclude. other: Item 11 lists the proceeds as not income, whoever paid for the policy. - example: A renter with $10,000 of wages and $12,000 of disability benefits, $5,000 of them from a plan the renter - paid for, has income of $17,000 under the statute and $10,000 under item 11. + example: A renter has $10,000 of wages and $12,000 of wage-replacement disability benefits, $5,000 of them from a plan + the renter paid for. The renter's income comes to $17,000 under the statute and $10,000 under item 11. pe_us: follows: statute code: @@ -12134,6 +12136,63 @@ candidates: Credit Limit Worksheet B (ctc_credit_limit_worksheet_b_applies.py). The legacy aggregates still count as an exclusion. The EITC keeps the broader section 32(c)(1)(C) test in elects_section_911_exclusion. Register the entry and add the marker once #10297 is on main. +- id: us:ak-energy-relief-2022-gross-income + program: income-tax + years: + from: 2022 + to: 2023 + type: tax + question: Does Alaska's 2022 supplemental energy relief payment count as federal gross income, when the IRS said + it would not challenge a taxpayer who leaves it out? + sources: + - kind: statute + citation: 26 U.S.C. 61(a) and 139(a), (b)(4) + url: https://www.law.cornell.edu/uscode/text/26/139 + - kind: guidance + citation: IRS News Release IR-2023-23, footnote 1 + url: https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers + - kind: guidance + citation: IRS Notice 2023-56, sections 2, 3.03 and 3.04 + url: https://www.irs.gov/pub/irs-drop/n-23-56.pdf#page=2 + - kind: guidance + citation: IRS Notice 2023-56, section 4.03 + url: https://www.irs.gov/pub/irs-drop/n-23-56.pdf#page=13 + - kind: agency-practice + citation: Alaska Department of Revenue, DOR Response to IRS Guidance on 2022 PFD (February 17, 2023) + url: https://dor.alaska.gov/docs/default-source/press-releases/2023_02_17-dor-response-to-irs-guidance-on-2022-pfd.pdf#page=1 + - kind: agency-practice + citation: Alaska Permanent Fund Dividend Division, Annual Report 2023, page 4 (dividend calculation) + url: https://dor.alaska.gov/docs/permanentfunddividendlibraries/annual-reports/2023-pfd-annual-report.pdf?sfvrsn=6f6d9c6c_1#page=4 + - kind: agency-practice + citation: Alaska Department of Revenue, Department of Revenue Announces 2024 Permanent Fund Dividend Amount and Energy + Relief (September 19, 2024) + url: https://dor.alaska.gov/department-of-revenue/news-detail/2024/09/19/department-of-revenue-announces-2024-permanent-fund-dividend-amount-and-energy-relief + readings: + statute: Section 61(a) counts all income unless another section excludes it. Section 139 excludes a government + payment only in connection with a qualified disaster, and the general welfare exclusion requires a payment + based on individual or family need. + other: In IR-2023-23, the IRS says that if a taxpayer leaves the payment out of 2022 income, it will not challenge + that treatment. In a footnote, it limits the Alaska item to the supplemental energy relief payment. In section + 4.03 of Notice 2023-56, the IRS lets a taxpayer who got nothing under the 2022 program in 2022 exclude a payment + under it that they got in 2023. + example: An Alaskan adult with $50,000 of wages has 2022 gross income of $52,622 if they leave the $662 payment + out, and $53,284 if they count it. + pe_us: + follows: gap-fill + code: + - policyengine_us/parameters/gov/irs/gross_income/ak_energy_relief_excluded.yaml + - policyengine_us/variables/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/taxable_ak_energy_relief.py + prs: + - https://github.com/PolicyEngine/policyengine-us/pull/10669 + state: ruled + note: By the IRS's own account, whether the 2022 payment qualifies under either exclusion depends on the facts, so the + model takes the agency's position and the taxpayer's cheaper choice. Alaska paid no energy relief with the 2023 + dividend and paid the relief that the Legislature added in 2023 with the 2024 dividend. So any energy relief that a + recipient got in 2023 came from the 2022 program. Alaska paid each eligible Alaskan once under that program, so a + 2023 recipient got nothing under it in 2022, and the model leaves the 2023 payment out too. The model counts + payments from 2024 on. In Notice 2023-56, the IRS says the news release applied only to payments that states made in + 2022, and in section 4.03 it adds only 2023 payments under 2022 programs. In Publication 525 for 2024, the IRS + treats the entire 2024 dividend as taxable. - id: us:charitable-non-itemizer-2020-separate-cap program: income-tax years: