Apply the federal TIN tests to the Maine dependent exemption credit

changelog.d/me-dependent-exemption-credit-tin.fixed.md

@@ -0,0 +1 @@
+Allow the Maine dependent exemption credit only for dependents for whom the filer can claim the federal Child Tax Credit or credit for other dependents, so a dependent without an SSN, ITIN or ATIN, or a return with a filer without an SSN or ITIN, gets no credit.

policyengine_us/tests/policy/baseline/gov/states/me/tax/income/credits/me_dependent_exemption_credit_amount_person.yaml

@@ -1,3 +1,8 @@
+# 36 MRSA 5219-SS allows the credit for each qualifying child and dependent for
+# whom the filer can claim the federal credit under section 24. The 2025 worksheet
+# counts the dependents on Form 1040ME line 13a: those for whom the filer is
+# eligible to claim the Child Tax Credit or the credit for other dependents. Both
+# federal credits need a TIN for the dependent and for each filer.
 - name: Child dependent under 6
   period: 2025
   input:
@@ -26,5 +31,142 @@
     is_tax_unit_dependent: true
     age: 2
   output:
-    # Even non-CTC children who are tax dependents qualify for ME credit
+    # A dependent who is not a CTC qualifying child still counts when the filer
+    # can claim the credit for other dependents for them.
     me_dependent_exemption_credit_amount_person: 610
+
+- name: Dependent without an SSN, ITIN or ATIN gets no credit in 2025
+  # The credit for other dependents requires the dependent's SSN, ITIN or ATIN.
+  period: 2025
+  input:
+    people:
+      head:
+        age: 40
+      spouse:
+        age: 40
+      child:
+        age: 8
+        is_tax_unit_dependent: true
+        ssn_card_type: NONE
+        has_tin: false
+    tax_units:
+      tax_unit:
+        members: [head, spouse, child]
+        filing_status: JOINT
+    households:
+      household:
+        members: [head, spouse, child]
+        state_code: ME
+  output:
+    ctc_qualifying_child: [false, false, false]
+    ctc_individual_maximum: [0, 0, 0]
+    me_dependent_exemption_credit_amount_person: [0, 0, 0]
+    me_dependent_exemption_credit: 0
+
+- name: Child of a head of household without any TIN gets no credit in 2025
+  # Neither the Child Tax Credit nor the credit for other dependents is allowed
+  # when the filer has no SSN or ITIN.
+  period: 2025
+  input:
+    people:
+      head:
+        age: 30
+        ssn_card_type: NONE
+        has_tin: false
+      child:
+        age: 4
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [head, child]
+        filing_status: HEAD_OF_HOUSEHOLD
+    households:
+      household:
+        members: [head, child]
+        state_code: ME
+  output:
+    ctc_individual_maximum: [0, 0]
+    me_dependent_exemption_credit_amount_person: [0, 0]
+    me_dependent_exemption_credit: 0
+
+- name: Child of a joint return where one spouse has no TIN gets no credit in 2025
+  # Each spouse on a joint return needs an SSN or ITIN for either federal credit.
+  period: 2025
+  input:
+    people:
+      head:
+        age: 30
+      spouse:
+        age: 30
+        ssn_card_type: NONE
+        has_tin: false
+      child:
+        age: 8
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [head, spouse, child]
+        filing_status: JOINT
+    households:
+      household:
+        members: [head, spouse, child]
+        state_code: ME
+  output:
+    ctc_individual_maximum: [0, 0, 0]
+    me_dependent_exemption_credit_amount_person: [0, 0, 0]
+    me_dependent_exemption_credit: 0
+
+- name: Child with an SSN of a head of household with an ITIN gets the credit in 2025
+  # The filer has no valid SSN, so IRC 24(h)(7) denies the Child Tax Credit and
+  # IRC 24(h)(4)(C) allows the $500 credit for other dependents. The child is under
+  # 6, so the Maine credit is 2 x $305.
+  period: 2025
+  input:
+    people:
+      head:
+        age: 30
+        ssn_card_type: OTHER_NON_CITIZEN
+      child:
+        age: 3
+        is_tax_unit_dependent: true
+        ssn_card_type: CITIZEN
+    tax_units:
+      tax_unit:
+        members: [head, child]
+        filing_status: HEAD_OF_HOUSEHOLD
+    households:
+      household:
+        members: [head, child]
+        state_code: ME
+  output:
+    ctc_qualifying_child: [false, false]
+    ctc_individual_maximum: [0, 500]
+    me_dependent_exemption_credit_amount_person: [0, 610]
+    me_dependent_exemption_credit: 610
+
+- name: 17-year-old dependent with an SSN gets the credit in 2025
+  # The child is too old for the Child Tax Credit and gets the credit for other
+  # dependents.
+  period: 2025
+  input:
+    people:
+      head:
+        age: 45
+      spouse:
+        age: 45
+      child:
+        age: 17
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [head, spouse, child]
+        filing_status: JOINT
+    households:
+      household:
+        members: [head, spouse, child]
+        state_code: ME
+  output:
+    ctc_qualifying_child: [false, false, false]
+    ctc_individual_maximum: [0, 0, 500]
+    me_dependent_exemption_credit_amount_person: [0, 0, 305]
+    me_dependent_exemption_credit: 305

policyengine_us/variables/gov/states/me/tax/income/credits/dependent_exemption/me_dependent_exemption_credit_amount_person.py

@@ -7,23 +7,37 @@ class me_dependent_exemption_credit_amount_person(Variable):
     unit = USD
     label = "Maine dependent exemption credit amount for each person"
     reference = (
-        "https://www.mainelegislature.org/legis/statutes/36/title36sec5219-SS.html"
+        "https://www.mainelegislature.org/legis/statutes/36/title36sec5219-SS.html",
+        # 2025 Form 1040ME Instructions, line 13a and Schedule A, lines 1
+        # and 10. PDF pages 5, 10.
+        "https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/25_1040me_gen_instr_w_cover_pg.pdf#page=5",
+        # 2025 Dependent Exemption Tax Credit Worksheet, lines 1 and 3.
+        "https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/25_dependent_exemption_tx_cr_fillable.pdf#page=1",
+        # 2025 Instructions for Schedule 8812, TIN Required by Due Date of
+        # Your Return To Claim the ODC, and Credit for Other Dependents.
+        # PDF pages 1-2.
+        "https://www.irs.gov/pub/irs-pdf/i1040s8.pdf#page=1",
     )
     definition_period = YEAR
     defined_for = "is_tax_unit_dependent"
 
     def formula(person, period, parameters):
-        dependent = person("is_tax_unit_dependent", period)
-        # 36 MRSA 5219-SS counts each "qualifying child and dependent" for
-        # whom the taxpayer is eligible to claim the federal child tax credit
-        # or credit for other dependents; a return on which the filer (or, if
-        # joint, either spouse) can be claimed as a dependent has no
-        # dependents (IRC 152(b)(1)).
-        dependent_filer = person.tax_unit(
-            "head_or_spouse_is_dependent_elsewhere_without_filing_exception", period
-        )
-        dependent = dependent & ~dependent_filer
+        # 36 MRSA 5219-SS allows the credit for each "qualifying child and
+        # dependent of the taxpayer for whom the taxpayer was eligible to
+        # claim the federal child tax credit pursuant to the Code, Section
+        # 24". The worksheet counts the dependents on Form 1040ME line 13a,
+        # which counts each dependent for whom the filer is eligible to claim
+        # "the federal child tax credit or the credit for other dependents".
+        # So a dependent counts when either credit is allowed for that person
+        # before the phase-out. This applies the federal identification
+        # tests: the dependent needs an SSN, ITIN or ATIN, and the filer (on
+        # a joint return, each spouse) an SSN or ITIN (IRC 24(e); Schedule
+        # 8812 instructions). A child whose filer has no valid SSN still
+        # counts through the credit for other dependents (IRC 24(h)(4)(C),
+        # 24(h)(7)). A return on which a filer can be claimed as a dependent
+        # has no dependents (IRC 152(b)(1)).
+        section_24_amount = person("ctc_individual_maximum", period)
         p = parameters(period).gov.states.me.tax.income.credits.dependent_exemption
         age = person("age", period)
         multiplier = p.multiplier.calc(age)
-        return dependent * multiplier * p.amount
+        return (section_24_amount > 0) * multiplier * p.amount