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Revise tax credit calculations for children and other dependents #2211

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Jan 29, 2019
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Revise tax credit calculations for children and other dependents #2211

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f47e16f
Rewrite ChildDepTaxCredit function
martinholmer Jan 25, 2019
b99acf1
Rewrite AdditionalCTC function
martinholmer Jan 27, 2019
b656757
Less strict comparison in test_reform_json_and_output test
martinholmer Jan 27, 2019
0f48fbb
Add dump option to test_reform_json_and_output test
martinholmer Jan 27, 2019
17a6854
Minor revision to tests
martinholmer Jan 27, 2019
d876cb3
Use newest version of TAXSIM-27 in validation tests
martinholmer Jan 29, 2019
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168 changes: 89 additions & 79 deletions taxcalc/calcfunctions.py
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Original file line number Diff line number Diff line change
Expand Up @@ -249,7 +249,7 @@ def Adj(e03150, e03210, c03260,
-------
c02900 : total Form 1040 adjustments, which are not included in AGI
"""
# Form 2555 foreign earned income deduction is assumed to be zero
# Form 2555 foreign earned income exclusion is assumed to be zero
# Form 1040 adjustments that are included in expanded income:
c02900 = ((1. - ALD_StudentLoan_hc) * e03210 +
c03260 +
Expand Down Expand Up @@ -983,7 +983,7 @@ def GainsTax(e00650, c01000, c23650, p23250, e01100, e58990, e00200,
dwks19 = 0.

# final calculations done no matter what the value of hasqdivltcg
c05100 = c24580 # because no foreign earned income deduction
c05100 = c24580 # because foreign earned income exclusion is assumed zero
c05700 = 0. # no Form 4972, Lump Sum Distributions
taxbc = c05700 + c05100
return (dwks10, dwks13, dwks14, dwks19, c05700, taxbc)
Expand Down Expand Up @@ -1102,7 +1102,7 @@ def NetInvIncTax(e00300, e00600, e02000, e26270, c01000,
Computes Net Investment Income Tax (NIIT) amount assuming that
all annuity income is excluded from net investment income.
"""
modAGI = c00100 # no deducted foreign earned income to add
modAGI = c00100 # no foreign earned income exclusion to add
if not NIIT_PT_taxed:
NII = max(0., e00300 + e00600 + c01000 + e02000 - e26270)
else: # do not subtract e26270 from e02000
Expand Down Expand Up @@ -1226,33 +1226,61 @@ def EITC(MARS, DSI, EIC, c00100, e00300, e00400, e00600, c01000,


@iterate_jit(nopython=True)
def ChildDepTaxCredit(n24, MARS, c00100, exact,
CTC_c, CTC_ps, CTC_prt, prectc, nu05,
CTC_c_under5_bonus, XTOT, num,
def ChildDepTaxCredit(n24, MARS, c00100, XTOT, num, c05800,
e07260, CR_ResidentialEnergy_hc,
e07300, CR_ForeignTax_hc,
c07180,
c07230,
e07240, CR_RetirementSavings_hc,
c07200,
CTC_c, CTC_ps, CTC_prt, exact,
DependentCredit_Child_c, DependentCredit_Nonchild_c,
FilerCredit_c, dep_credit):
"""
Computes pre-CTC amount (prectc) and nonrefundable dependent credit.
"""
modAGI = c00100 # no foreign earned income deduction to add to AGI
# calculate and phase-out pre-CTC amount
base_ctc = CTC_c * n24 + CTC_c_under5_bonus * nu05
prectc = base_ctc
if prectc > 0. and modAGI > CTC_ps[MARS - 1]:
excess = modAGI - CTC_ps[MARS - 1]
if exact == 1: # exact calculation as on tax forms
excess = 1000. * math.ceil(excess / 1000.)
prectc = max(0., prectc - CTC_prt * excess)
# calculate and phase-out dependent credit after pre-CTC is phased out
dep_credit = (DependentCredit_Child_c * n24 +
DependentCredit_Nonchild_c * max(0, XTOT - n24 - num) +
FilerCredit_c[MARS - 1])
if dep_credit > 0. and modAGI > CTC_ps[MARS - 1]:
CTC_c_under5_bonus, nu05, FilerCredit_c,
c07220, dep_credit, codtc_limited):
"""
Computes amounts on "Child Tax Credit and Credit for Other Dependents
Worksheet" in 2018 Publication 972, which pertain to these two
nonrefundable tax credits.
"""
# Worksheet Part 1
line1 = ((CTC_c + DependentCredit_Child_c) * n24 +
CTC_c_under5_bonus * nu05)
line2 = (DependentCredit_Nonchild_c * max(0, XTOT - n24 - num) +
FilerCredit_c[MARS - 1])
line3 = line1 + line2
modAGI = c00100 # no foreign earned income exclusion to add to AGI (line6)
if line3 > 0. and modAGI > CTC_ps[MARS - 1]:
excess = modAGI - CTC_ps[MARS - 1]
if exact == 1: # exact calculation as on tax forms
excess = 1000. * math.ceil(excess / 1000.)
dep_credit = max(0., dep_credit - CTC_prt * excess)
return (prectc, dep_credit)
line10 = max(0., line3 - CTC_prt * excess)
else:
line10 = line3
if line10 > 0.:
# Worksheet Part 2
line11 = c05800
line12 = (e07260 * (1. - CR_ResidentialEnergy_hc) +
e07300 * (1. - CR_ForeignTax_hc) +
c07180 + # child & dependent care expense credit
c07230 + # education credit
e07240 * (1. - CR_RetirementSavings_hc) +
c07200) # Schedule R credit
line13 = line11 - line12
line14 = 0.
line15 = max(0., line13 - line14)
line16 = min(line10, line15) # credit is capped by tax liability
else:
line16 = 0.
# separate the CTC and ODTC amounts
c07220 = 0. # nonrefundable CTC amount
dep_credit = 0. # nonrefundable ODTC amount
if line16 > 0.:
if line1 > 0.:
c07220 = line16 * line1 / line3
dep_credit = max(0., line16 - c07220)
# compute codtc_limited for use in AdditionalCTC function
codtc_limited = max(0., line10 - line16)
return (c07220, dep_credit, codtc_limited)


@iterate_jit(nopython=True)
Expand Down Expand Up @@ -1352,7 +1380,7 @@ def SchR(age_head, age_spouse, MARS, c00100,
are not able to be changed using Policy class parameters.

Note that the CR_SchR_hc policy parameter allows the user to eliminate
or reduce total schedule R credits.
or reduce total Schedule R credits.
"""
if age_head >= 65 or (MARS == 2 and age_spouse >= 65):
# calculate credit assuming nobody is disabled (so line12 = line10)
Expand Down Expand Up @@ -1472,7 +1500,7 @@ def CharityCredit(e19800, e20100, c00100, CR_Charity_rt, CR_Charity_f,

@iterate_jit(nopython=True)
def NonrefundableCredits(c05800, e07240, e07260, e07300, e07400,
e07600, p08000, prectc, dep_credit,
e07600, p08000, dep_credit,
personal_nonrefundable_credit,
CR_RetirementSavings_hc, CR_ForeignTax_hc,
CR_ResidentialEnergy_hc, CR_GeneralBusiness_hc,
Expand Down Expand Up @@ -1507,11 +1535,11 @@ def NonrefundableCredits(c05800, e07240, e07260, e07300, e07400,
c07240 = min(e07240 * (1. - CR_RetirementSavings_hc), avail)
avail = avail - c07240
if DependentCredit_before_CTC:
# Dependent credit
# Other dependent credit
dep_credit = min(dep_credit, avail)
avail = avail - dep_credit
# Child tax credit
c07220 = min(prectc, avail)
c07220 = min(c07220, avail)
avail = avail - c07220
# Residential energy credit - Form 5695
c07260 = min(e07260 * (1. - CR_ResidentialEnergy_hc), avail)
Expand Down Expand Up @@ -1543,59 +1571,41 @@ def NonrefundableCredits(c05800, e07240, e07260, e07300, e07400,


@iterate_jit(nopython=True)
def AdditionalCTC(n24, prectc, earned, c07220, ptax_was,
ACTC_Income_thd, ACTC_rt, ACTC_ChildNum,
c03260, e09800, c59660, e11200, c11070, nu05,
ACTC_rt_bonus_under5family):
"""
Calculates Additional (refundable) Child Tax Credit, c11070.
"""
c82925 = 0.
c82930 = 0.
c82935 = 0.
c82880 = 0.
c82885 = 0.
c82890 = 0.
c82900 = 0.
c82905 = 0.
c82910 = 0.
c82915 = 0.
c82920 = 0.
c82937 = 0.
c82940 = 0.
c11070 = 0.
# Part I of 2005 Form 8812
if n24 > 0:
c82925 = prectc
c82930 = c07220
c82935 = c82925 - c82930
# CTC not applied to tax
c82880 = max(0., earned)
c82885 = max(0., c82880 - ACTC_Income_thd)
# Accomodate ACTC rate bonus for families with children under 5
def AdditionalCTC(codtc_limited, CTC_c, n24, earned, ACTC_Income_thd,
ACTC_rt, nu05, ACTC_rt_bonus_under5family, ACTC_ChildNum,
ptax_was, c03260, e09800, c59660, e11200,
c11070):
"""
Calculates refundable Additional Child Tax Credit (ACTC), c11070,
following 2018 Form 8812 logic.
"""
# Part I
line3 = codtc_limited
line4 = CTC_c * n24
c11070 = 0. # line15
if line3 > 0. and line4 > 0.:
line5 = min(line3, line4)
line7 = max(0., earned - ACTC_Income_thd)
# accommodate ACTC rate bonus for families with children under 5
if nu05 == 0:
ACTC_rate = ACTC_rt
else:
ACTC_rate = ACTC_rt + ACTC_rt_bonus_under5family
c82890 = ACTC_rate * c82885
# Part II of 2005 Form 8812
if n24 >= ACTC_ChildNum and c82890 < c82935:
c82900 = 0.5 * ptax_was
c82905 = c03260 + e09800
c82910 = c82900 + c82905
c82915 = c59660 + e11200
c82920 = max(0., c82910 - c82915)
c82937 = max(c82890, c82920)
# Part II of 2005 Form 8812
if n24 < ACTC_ChildNum:
if n24 > 0 and c82890 > 0:
c82940 = min(c82890, c82935)
else: # if n24 >= ACTC_ChildNum
if c82890 >= c82935:
c82940 = c82935
else:
c82940 = min(c82935, c82937)
c11070 = c82940
line8 = ACTC_rate * line7
if n24 < ACTC_ChildNum:
if line8 > 0.:
c11070 = min(line5, line8)
else: # if n24 >= ACTC_ChildNum
if line8 >= line5:
c11070 = line5
else: # complete Part II
line9 = 0.5 * ptax_was
line10 = c03260 + e09800
line11 = line9 + line10
line12 = c59660 + e11200
line13 = max(0., line11 - line12)
line14 = max(line8, line13)
c11070 = min(line5, line14)
return c11070


Expand Down
2 changes: 1 addition & 1 deletion taxcalc/calculator.py
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Original file line number Diff line number Diff line change
Expand Up @@ -1448,12 +1448,12 @@ def _calc_one_year(self, zero_out_calc_vars=False):
self._taxinc_to_amt()
F2441(self.__policy, self.__records)
EITC(self.__policy, self.__records)
ChildDepTaxCredit(self.__policy, self.__records)
PersonalTaxCredit(self.__policy, self.__records)
AmOppCreditParts(self.__policy, self.__records)
SchR(self.__policy, self.__records)
EducationTaxCredit(self.__policy, self.__records)
CharityCredit(self.__policy, self.__records)
ChildDepTaxCredit(self.__policy, self.__records)
NonrefundableCredits(self.__policy, self.__records)
AdditionalCTC(self.__policy, self.__records)
C1040(self.__policy, self.__records)
Expand Down
2 changes: 1 addition & 1 deletion taxcalc/records_variables.json
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Original file line number Diff line number Diff line change
Expand Up @@ -1041,7 +1041,7 @@
"desc": "Personal exemption before phase-out",
"form": {"2013-20??": "calculated variable"}
},
"prectc": {
"codtc_limited": {
"type": "float",
"desc": "search taxcalc/calcfunctions.py for how calculated and used",
"form": {"2013-20??": "calculated variable"}
Expand Down
6 changes: 3 additions & 3 deletions taxcalc/tests/cpscsv_agg_expect.txt
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Original file line number Diff line number Diff line change
Expand Up @@ -13,11 +13,11 @@ AMT Liability ($b) 10.6 13.4 13.8 15.6 1.3
AMT Filers (#m) 2.8 3.5 3.7 4.0 0.2 0.3 0.3 0.2 0.3 0.3
Tax before Credits ($b) 1120.1 1297.3 1330.3 1380.7 1380.7 1489.3 1594.3 1686.2 1773.7 1860.1
Refundable Credits ($b) 67.2 68.6 68.8 68.2 79.0 78.5 78.2 78.6 79.8 80.4
Nonrefundable Credits ($b) 26.7 27.0 27.1 27.4 90.0 92.1 93.8 95.2 96.4 97.6
Nonrefundable Credits ($b) 26.7 27.0 27.1 27.4 90.1 92.3 94.0 95.4 96.7 97.9
Reform Surtaxes ($b) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Taxes ($b) 6.7 7.8 8.0 8.1 8.6 9.6 10.4 11.2 11.8 12.5
Ind Income Tax ($b) 1032.9 1209.5 1242.4 1293.2 1220.4 1328.3 1432.8 1523.6 1609.3 1694.6
Ind Income Tax ($b) 1032.9 1209.5 1242.4 1293.2 1220.2 1328.1 1432.5 1523.3 1609.0 1694.3
Payroll Taxes ($b) 933.0 1069.6 1096.3 1140.9 1193.6 1260.9 1326.1 1384.6 1441.3 1498.8
Combined Liability ($b) 1965.9 2279.0 2338.8 2434.1 2414.0 2589.2 2758.8 2908.2 3050.6 3193.3
Combined Liability ($b) 1965.9 2279.0 2338.8 2434.1 2413.8 2589.0 2758.6 2907.9 3050.3 3193.0
With Income Tax <= 0 (#m) 58.0 54.1 55.2 56.0 59.7 59.9 60.1 60.6 61.2 61.8
With Combined Tax <= 0 (#m) 36.0 34.9 35.7 36.3 38.1 38.5 39.1 39.8 40.5 41.3
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