Count CTC-qualifying children only when the filer meets the identification requirements

changelog.d/ctc-qualifying-children-filer-id.fixed.md

@@ -0,0 +1 @@
+Exclude children whose filer fails the Child Tax Credit identification requirements from ctc_qualifying_children: from 2025 the filer social security number rule (IRC 24(h)(7)(A)(i)), and in every year the taxpayer identification number rule (IRC 24(e)(2)). This removes the children of ITIN filers from the North Carolina child deduction from 2025, and removes the children of filers with no TIN from the North Carolina child deduction and credit for children (2015-2017), the Utah child tax credit, the Maine fairness credits, and the New York Empire State child credit $100 minimum under its pre-2025 and post-2027 rules. The Idaho Child Tax Credit and the CARES recovery rebate keep counting these children under the IRC 24(c) definition, and the Utah child tax credit and Maine fairness credits keep counting the children of ITIN filers, who get the credit for other dependents.

policyengine_us/reforms/congress/afa/afa_other_dependent_credit.py

@@ -148,7 +148,13 @@ def formula(tax_unit, period, parameters):
             if ctc.refundable.fully_refundable:
                 reduction = tax_unit("ctc_lower_phase_out", period)
                 p = parameters(period).gov.contrib.congress.afa.ctc.phase_out
-                qualifying_children = tax_unit("ctc_qualifying_children", period)
+                # Proposed section 24A has no filer SSN rule, so the floor
+                # counts children without the federal filer test.
+                qualifying_children = add(
+                    tax_unit,
+                    period,
+                    ["ctc_qualifying_child_ignoring_filer_identification"],
+                )
                 lower_floor = p.lower_floor * qualifying_children
                 capped_credit = min_(lower_floor, maximum_amount)
                 reduced_max_amount_lower = max_(
@@ -186,7 +192,14 @@ def formula(tax_unit, period, parameters):
             )
             reduction = tax_unit("ctc_lower_phase_out", period)
             p = parameters(period).gov.contrib.congress.afa.ctc.phase_out
-            qualifying_children = tax_unit("ctc_qualifying_children", period)
+            # Proposed section 24A has no filer SSN rule (only a timely
+            # taxpayer TIN, 24A(e)(2)), so the floor counts children without
+            # the federal filer test.
+            qualifying_children = add(
+                tax_unit,
+                period,
+                ["ctc_qualifying_child_ignoring_filer_identification"],
+            )
             lower_floor = p.lower_floor * qualifying_children
             reduced_max_amount_lower = max_(lower_floor, maximum_amount - reduction)
             higher_reduction = tax_unit("ctc_higher_phase_out", period)

policyengine_us/reforms/congress/hawley/awra/american_worker_rebate_act.py

@@ -84,7 +84,12 @@ class american_worker_tax_rebate_child_amount(Variable):
             "The tax rebate amount for children, under the American Worker Rebate Act."
         )
         definition_period = YEAR
-        defined_for = "ctc_qualifying_child"
+        # The bill counts "qualifying children (within the meaning of section
+        # 24(c))", so the CTC filer identification requirements do not apply;
+        # american_worker_tax_rebate_eligible applies the bill's own rules.
+        # The variable also applies the CTC child social security number rule
+        # and the IRC 152(b)(1) dependent-filer rule.
+        defined_for = "ctc_qualifying_child_ignoring_filer_identification"
 
         adds = ["gov.contrib.congress.hawley.awra.amount.non_joint"]
 

policyengine_us/reforms/congress/romney/family_security_act_2024/ctc/family_security_act_2024_ctc.py

@@ -84,17 +84,10 @@ class ctc_child_individual_maximum(Variable):
         def formula(person, period, parameters):
             age = person("age", period)
             qualifying_child = person("ctc_qualifying_child", period)
-            filer_meets_child_ctc_id_requirements = person.tax_unit(
-                "filer_meets_child_ctc_identification_requirements", period
-            )
             p = parameters(
                 period
             ).gov.contrib.congress.romney.family_security_act_2_0.ctc
-            return (
-                qualifying_child
-                * filer_meets_child_ctc_id_requirements
-                * p.base.calc(age)
-            )
+            return qualifying_child * p.base.calc(age)
 
     class ctc_qualifying_children(Variable):
         value_type = int

policyengine_us/reforms/ctc/ctc_additional_bracket.py

@@ -15,15 +15,8 @@ class ctc_child_individual_maximum(Variable):
         def formula(person, period, parameters):
             age = person("age", period)
             qualifying_child = person("ctc_qualifying_child", period)
-            filer_meets_child_ctc_id_requirements = person.tax_unit(
-                "filer_meets_child_ctc_identification_requirements", period
-            )
             p = parameters(period).gov.contrib.ctc.additional_bracket.amount
-            return (
-                qualifying_child
-                * filer_meets_child_ctc_id_requirements
-                * p.base.calc(age)
-            )
+            return qualifying_child * p.base.calc(age)
 
     class ctc_refundable_maximum(Variable):
         value_type = float

policyengine_us/reforms/ctc/ctc_older_child_supplement.py

@@ -19,19 +19,12 @@ class ctc_child_individual_maximum(Variable):
         def formula(person, period, parameters):
             age = person("age", period)
             qualifying_child = person("ctc_qualifying_child", period)
-            filer_meets_child_ctc_id_requirements = person.tax_unit(
-                "filer_meets_child_ctc_identification_requirements", period
-            )
             base_amount = parameters(period).gov.irs.credits.ctc.amount.base
             base_amount = base_amount.calc(age)
             oldest_child = person("child_index", period) == 1
             p_ref = parameters(period).gov.contrib.ctc.oldest_child_supplement
             oldest_child_supplement = oldest_child * p_ref.amount
-            return (
-                qualifying_child
-                * filer_meets_child_ctc_id_requirements
-                * (base_amount + oldest_child_supplement)
-            )
+            return qualifying_child * (base_amount + oldest_child_supplement)
 
     class reform(Reform):
         def apply(self):

policyengine_us/reforms/refundable_credit_conversion/refundable_credit_conversion.py

@@ -54,10 +54,12 @@ def formula(tax_unit, period, parameters):
             else:
                 taxpayer_amount = 0
 
-            # Reuses the baseline `ctc_qualifying_children` variable so
-            # the same eligibility rules as the federal CTC apply (per
-            # IRC §24(c)). Hoisted so the per-other-dependent branch can
-            # reuse the same count.
+            # Reuses the baseline `ctc_qualifying_children` variable, the
+            # children for whom the federal CTC is allowed (IRC §24(c), (e)
+            # and (h)(7)); a child whose filer fails the filer
+            # identification test counts as an other dependent below.
+            # Hoisted so the per-other-dependent branch can reuse the same
+            # count.
             ctc_count = tax_unit("ctc_qualifying_children", period)
             if p.credit.use_ctc_dependent_credit:
                 ctc_dependent_amount = ctc_count * p.credit.per_ctc_dependent

policyengine_us/reforms/states/id/ctc/id_ctc_reform.py

@@ -36,7 +36,7 @@ class id_refundable_ctc(Variable):
         def formula(tax_unit, period, parameters):
             p = parameters(period).gov.contrib.states.id.ctc
             # Potential is the revived (nonrefundable) Idaho CTC worksheet
-            # amount, ctc_qualifying_children * amount.
+            # amount, id_ctc_qualifying_children * amount.
             potential = tax_unit("id_ctc", period)
             ordered_credits = parameters(
                 period
@@ -50,7 +50,7 @@ def formula(tax_unit, period, parameters):
             )
             non_refundable = min_(potential, credit_limit)
             unused_credit = max_(potential - non_refundable, 0)
-            eligible_children = tax_unit("ctc_qualifying_children", period)
+            eligible_children = tax_unit("id_ctc_qualifying_children", period)
             refund_limit = p.refundable.amount * eligible_children
             refundable_credit = min_(unused_credit, refund_limit)
             # Only pay the refundable portion when the refundable option is on;

policyengine_us/reforms/states/il/sb3567/il_sb3567_reform.py

@@ -30,7 +30,12 @@ def formula(tax_unit, period, parameters):
             person = tax_unit.members
             age = person("age", period)
             age_eligible_child = age < ctc.age_limit
-            federal_ctc_eligible_child = person("ctc_qualifying_child", period)
+            # The Illinois credit builds on the Illinois EITC, which does not
+            # require the filer's social security number, so the federal CTC
+            # filer identification requirements are not applied here.
+            federal_ctc_eligible_child = person(
+                "ctc_qualifying_child_ignoring_filer_identification", period
+            )
             eligible_child = age_eligible_child & federal_ctc_eligible_child
             eligible_child_present = tax_unit.any(eligible_child)
 

policyengine_us/reforms/states/mt/ctc/mt_ctc.py

@@ -13,6 +13,37 @@ def create_mt_ctc() -> Reform:
     - Phase-out by filing status (same as newborn credit)
     """
 
+    class mt_ctc_qualifying_child(Variable):
+        value_type = bool
+        entity = Person
+        label = "Montana Child Tax Credit qualifying child"
+        definition_period = YEAR
+        defined_for = StateCode.MT
+
+        def formula(person, period, parameters):
+            # Children who qualify for a federal section 24 credit (0-16),
+            # plus 17-year-old dependents. As in HB268, a child whose filer
+            # fails the federal filer SSN rule gets the credit for other
+            # dependents (IRC 24(h)(4)(C)), so both groups need only a filer
+            # SSN or ITIN (IRC 24(e)(2)).
+            age = person("age", period)
+            is_ctc_child = person(
+                "ctc_qualifying_child_ignoring_filer_identification", period
+            )
+            is_17_dependent = (age == 17) & person("is_tax_unit_dependent", period)
+            filer_has_tin = person.tax_unit(
+                "filer_meets_ctc_identification_requirements", period
+            )
+            return (is_ctc_child | is_17_dependent) & filer_has_tin
+
+    class mt_ctc_qualifying_children(Variable):
+        value_type = int
+        entity = TaxUnit
+        label = "Montana Child Tax Credit qualifying children"
+        definition_period = YEAR
+        defined_for = StateCode.MT
+        adds = ["mt_ctc_qualifying_child"]
+
     class mt_ctc(Variable):
         value_type = float
         entity = Person
@@ -25,10 +56,7 @@ def formula(person, period, parameters):
             eligible = person.tax_unit("mt_ctc_eligible", period)
             p = parameters(period).gov.contrib.states.mt.ctc
             age = person("age", period)
-            # Include ctc_qualifying_child (0-16) plus 17-year-old dependents
-            is_ctc_child = person("ctc_qualifying_child", period)
-            is_17_dependent = (age == 17) & person("is_tax_unit_dependent", period)
-            is_qualifying = is_ctc_child | is_17_dependent
+            is_qualifying = person("mt_ctc_qualifying_child", period)
             # Calculate credit amount based on age brackets
             child_credit = p.amount.calc(age) * is_qualifying
             credit_amount = person.tax_unit.sum(child_credit)
@@ -55,13 +83,7 @@ class mt_ctc_eligible(Variable):
         def formula(tax_unit, period, parameters):
             p = parameters(period).gov.contrib.states.mt.ctc
             # Must have at least one qualifying child (0-17)
-            has_ctc_child = tax_unit("ctc_qualifying_children", period) > 0
-            person = tax_unit.members
-            age = person("age", period)
-            has_17_dependent = tax_unit.any(
-                (age == 17) & person("is_tax_unit_dependent", period)
-            )
-            has_qualifying_child = has_ctc_child | has_17_dependent
+            has_qualifying_child = tax_unit("mt_ctc_qualifying_children", period) > 0
             # Earned income requirement is optional
             earned_income_required = p.earned_income_requirement.in_effect
             earned_income = tax_unit("tax_unit_earned_income", period)
@@ -83,6 +105,8 @@ def modify_parameters(parameters):
 
     class reform(Reform):
         def apply(self):
+            self.update_variable(mt_ctc_qualifying_child)
+            self.update_variable(mt_ctc_qualifying_children)
             self.update_variable(mt_ctc)
             self.update_variable(mt_ctc_eligible)
             self.modify_parameters(modify_parameters)

policyengine_us/reforms/states/mt/hb268/mt_hb268.py

@@ -4,6 +4,38 @@
 
 
 def create_mt_hb268() -> Reform:
+    class mt_hb268_qualifying_child(Variable):
+        value_type = bool
+        entity = Person
+        label = "Montana HB268 qualifying child"
+        definition_period = YEAR
+        reference = (
+            "https://leg.mt.gov/bills/2023/billpdf/HB0268.pdf",
+            "https://www.law.cornell.edu/uscode/text/26/24#h_4_C",
+        )
+        defined_for = StateCode.MT
+
+        def formula(person, period, parameters):
+            # HB 268 Section 1(1) requires a taxpayer "permitted a child tax
+            # credit under section 24 of the Internal Revenue Code". A child
+            # whose filer fails the federal filer SSN rule of IRC 24(h)(7)
+            # gets the credit for other dependents under IRC 24(h)(4)(C), so
+            # the child counts if the filer has an SSN or ITIN (IRC 24(e)(2)).
+            child = person("ctc_qualifying_child_ignoring_filer_identification", period)
+            filer_has_tin = person.tax_unit(
+                "filer_meets_ctc_identification_requirements", period
+            )
+            return child & filer_has_tin
+
+    class mt_hb268_qualifying_children(Variable):
+        value_type = int
+        entity = TaxUnit
+        label = "Montana HB268 qualifying children"
+        definition_period = YEAR
+        reference = "https://leg.mt.gov/bills/2023/billpdf/HB0268.pdf"
+        defined_for = StateCode.MT
+        adds = ["mt_hb268_qualifying_child"]
+
     class mt_hb268(Variable):
         value_type = float
         entity = Person
@@ -17,7 +49,7 @@ def formula(person, period, parameters):
             eligible = person.tax_unit("mt_hb268_eligible", period)
             p = parameters(period).gov.contrib.states.mt.hb268
             # Only count qualifying children
-            is_qualifying = person("ctc_qualifying_child", period)
+            is_qualifying = person("mt_hb268_qualifying_child", period)
             age = person("age", period)
             child_credit = p.amount.calc(age) * is_qualifying
             credit_amount = person.tax_unit.sum(child_credit)
@@ -43,7 +75,7 @@ def formula(tax_unit, period, parameters):
             p = parameters(period).gov.contrib.states.mt.hb268.income_limit
             # Per HB 268 Section 1(1), taxpayer must be "permitted a child
             # tax credit under section 24 of the Internal Revenue Code"
-            federal_ctc_eligible = tax_unit("ctc_qualifying_children", period) > 0
+            federal_ctc_eligible = tax_unit("mt_hb268_qualifying_children", period) > 0
             agi = tax_unit("adjusted_gross_income", period)
             agi_eligible = agi <= p.agi
             # CTC limited to filers with investment income below a certain threshold
@@ -71,6 +103,8 @@ def modify_parameters(parameters):
 
     class reform(Reform):
         def apply(self):
+            self.update_variable(mt_hb268_qualifying_child)
+            self.update_variable(mt_hb268_qualifying_children)
             self.update_variable(mt_hb268)
             self.update_variable(mt_hb268_eligible)
             self.modify_parameters(modify_parameters)

policyengine_us/reforms/states/ny/a04038/ny_a04038_enhanced_escc_infants.py

@@ -32,9 +32,10 @@ def formula(tax_unit, period, parameters):
             person = tax_unit.members
             age = person("age", period)
 
-            # Post-2024 CTC rules (2025-2027)
-            qualifies_for_federal_ctc = person("ctc_qualifying_child", period)
-            qualifies = qualifies_for_federal_ctc & (age >= p.minimum_age)
+            # Post-2024 CTC rules (2025-2027). Use the baseline NY qualifying
+            # child (ny_ctc_post_2024_base), which allows ITIN holders and
+            # does not apply the federal filer SSN requirement.
+            qualifies = person("ny_escc_qualifying_child", period)
 
             # Calculate base credit amount by age
             credit_by_age = p.post_2024.amount.calc(age)

policyengine_us/reforms/states/ut/ctc/ut_ctc_reform.py

@@ -17,7 +17,14 @@ class ut_ctc_eligible_children(Variable):
         def formula(tax_unit, period, parameters):
             p = parameters(period).gov.states.ut.tax.income.credits.ctc
             person = tax_unit.members
-            ctc_eligible_child = person("ctc_qualifying_child", period)
+            # Same child test as the baseline ut_ctc_potential: any section
+            # 24 credit, including the credit for other dependents
+            # (IRC 24(h)(4)(C)), with a filer SSN or ITIN (IRC 24(e)(2)).
+            child = person("ctc_qualifying_child_ignoring_filer_identification", period)
+            filer_has_tin = person.tax_unit(
+                "filer_meets_ctc_identification_requirements", period
+            )
+            ctc_eligible_child = child & filer_has_tin
             age = person("age", period)
             ut_child_age_eligible = p.child_age_threshold.calc(age)
             return tax_unit.sum(ctc_eligible_child & ut_child_age_eligible)