Fix CalEITC child counts for ITIN holders

changelog.d/statute-bugs-ca-caleitc-itin-children.fixed.md

@@ -0,0 +1 @@
+Count qualifying children with an ITIN or SSN for California's earned income tax credit from 2020.

policyengine_us/tests/policy/baseline/gov/states/ca/tax/income/credits/earned_income/ca_eitc.yaml

@@ -3,7 +3,7 @@
   absolute_error_margin: 20
   input:
     employment_income: 20_500
-    eitc_child_count: 0
+    ca_eitc_child_count: 0
   output:
     ca_eitc: 88
 
@@ -54,3 +54,115 @@
     ca_income_tax_before_refundable_credits: 0
     ca_eitc: 0  # too much investment income to be CalEITC eligible
     ca_income_tax: 0
+
+- name: A qualifying ITIN child uses the one-child CalEITC schedule
+  period: 2024
+  absolute_error_margin: 0.01
+  input:
+    people:
+      parent:
+        age: 35
+        is_tax_unit_head: true
+        is_eitc_qualifying_child: false
+        ssn_card_type: CITIZEN
+        has_tin: true
+      child:
+        age: 8
+        is_tax_unit_dependent: true
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: true
+    tax_units:
+      unit:
+        members: [parent, child]
+        ca_eitc_eligible: true
+        ca_eitc_earned_income: 1_000
+        adjusted_gross_income: 1_000
+    households:
+      household:
+        members: [parent, child]
+        state_code: CA
+  output:
+    eitc_child_count: 0
+    ca_eitc_child_count: 1
+    # $1,000 * .34 * .85, rather than the childless $65.025.
+    ca_eitc: 289
+
+- name: A child without an SSN or ITIN does not increase CalEITC
+  period: 2024
+  absolute_error_margin: 0.01
+  input:
+    people:
+      parent:
+        age: 35
+        is_tax_unit_head: true
+        is_eitc_qualifying_child: false
+        ssn_card_type: CITIZEN
+        has_tin: true
+      child:
+        age: 8
+        is_tax_unit_dependent: true
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: false
+    tax_units:
+      unit:
+        members: [parent, child]
+        ca_eitc_eligible: true
+        ca_eitc_earned_income: 1_000
+        adjusted_gross_income: 1_000
+    households:
+      household:
+        members: [parent, child]
+        state_code: CA
+  output:
+    eitc_child_count: 0
+    ca_eitc_child_count: 0
+    ca_eitc: 65.025
+
+- name: Four ITIN qualifying children use the three-or-more-child CalEITC schedule
+  period: 2024
+  absolute_error_margin: 0.01
+  input:
+    people:
+      parent:
+        age: 35
+        is_tax_unit_head: true
+        is_eitc_qualifying_child: false
+        ssn_card_type: CITIZEN
+        has_tin: true
+      child1:
+        age: 12
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: true
+      child2:
+        age: 10
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: true
+      child3:
+        age: 8
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: true
+      child4:
+        age: 6
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: true
+    tax_units:
+      unit:
+        members: [parent, child1, child2, child3, child4]
+        ca_eitc_eligible: true
+        ca_eitc_earned_income: 1_000
+        adjusted_gross_income: 1_000
+    households:
+      household:
+        members: [parent, child1, child2, child3, child4]
+        state_code: CA
+  output:
+    eitc_child_count: 0
+    ca_eitc_child_count: 4
+    # $1,000 * .45 * .85; the count itself is not capped at three.
+    ca_eitc: 382.5

policyengine_us/tests/policy/baseline/gov/states/ca/tax/income/credits/earned_income/ca_eitc_child_count.yaml

@@ -0,0 +1,114 @@
+- name: An ITIN qualifying child does not count before the 2020 extension
+  period: 2019
+  input:
+    people:
+      parent:
+        age: 35
+        is_eitc_qualifying_child: false
+        ssn_card_type: CITIZEN
+        has_tin: true
+      child:
+        age: 8
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: true
+    tax_units:
+      unit:
+        members: [parent, child]
+    households:
+      household:
+        members: [parent, child]
+        state_code: CA
+  output:
+    eitc_child_count: 0
+    ca_eitc_child_count: 0
+
+- name: An ITIN qualifying child counts starting in 2020 without changing the federal count
+  period: 2020
+  input:
+    people:
+      parent:
+        age: 35
+        is_eitc_qualifying_child: false
+        ssn_card_type: CITIZEN
+        has_tin: true
+      child:
+        age: 8
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: true
+    tax_units:
+      unit:
+        members: [parent, child]
+    households:
+      household:
+        members: [parent, child]
+        state_code: CA
+  output:
+    eitc_child_count: 0
+    ca_eitc_child_count: 1
+
+- name: California counts qualifying SSN and ITIN children but excludes missing IDs and nonqualifying dependents
+  period: 2024
+  input:
+    people:
+      parent:
+        age: 35
+        is_eitc_qualifying_child: false
+        ssn_card_type: CITIZEN
+        has_tin: true
+      ssn_child:
+        age: 12
+        is_eitc_qualifying_child: true
+        ssn_card_type: CITIZEN
+        has_tin: true
+      itin_child:
+        age: 10
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: true
+      child_without_id:
+        age: 8
+        is_eitc_qualifying_child: true
+        ssn_card_type: NONE
+        has_tin: false
+      nonqualifying_dependent:
+        age: 25
+        is_eitc_qualifying_child: false
+        ssn_card_type: NONE
+        has_tin: true
+    tax_units:
+      unit:
+        members: [parent, ssn_child, itin_child, child_without_id, nonqualifying_dependent]
+    households:
+      household:
+        members: [parent, ssn_child, itin_child, child_without_id, nonqualifying_dependent]
+        state_code: CA
+  output:
+    eitc_child_count: 1
+    ca_eitc_child_count: 2
+
+- name: A qualifying child with an SSN not valid for employment counts for California
+  period: 2024
+  input:
+    people:
+      parent:
+        age: 35
+        is_eitc_qualifying_child: false
+        ssn_card_type: CITIZEN
+        has_tin: true
+      child:
+        age: 8
+        is_eitc_qualifying_child: true
+        ssn_card_type: OTHER_NON_CITIZEN
+        has_tin: true
+    tax_units:
+      unit:
+        members: [parent, child]
+    households:
+      household:
+        members: [parent, child]
+        state_code: CA
+  output:
+    eitc_child_count: 0
+    ca_eitc_child_count: 1

policyengine_us/tests/policy/baseline/gov/states/ca/tax/income/credits/earned_income/ca_eitc_income_boundary.yaml

@@ -37,7 +37,7 @@
     age: [35, 35, 35, 35]
     state_code: [CA, CA, CA, CA]
     employment_income: [31_950, 31_950, 31_950, 31_950]
-    eitc_child_count: [0, 1, 2, 3]
+    ca_eitc_child_count: [0, 1, 2, 3]
   output:
     ca_eitc_eligible: [true, true, true, true]
     ca_eitc: [0.009155, 0.030057, 0.041937, 0.042520]
@@ -49,7 +49,7 @@
     state_code: [CA, CA, CA, CA]
     employment_income: [31_951, 31_951, 31_951, 31_951]
     adjusted_gross_income: [10_000, 10_000, 10_000, 10_000]
-    eitc_child_count: [0, 1, 2, 3]
+    ca_eitc_child_count: [0, 1, 2, 3]
   output:
     ca_eitc_eligible: [true, true, true, true]
     ca_eitc: [0, 0, 0, 0]

policyengine_us/tests/policy/baseline/gov/states/ca/tax/income/credits/earned_income/ca_eitc_integration.yaml

@@ -4,7 +4,7 @@
   absolute_error_margin: 20
   input:
     state_code: CA
-    eitc_child_count: 3
+    ca_eitc_child_count: 3
     employment_income: 8_000
     # AGI equals earned income so the worksheet's earned-income/AGI credit
     # comparison isolates the table value.
@@ -18,7 +18,7 @@
   absolute_error_margin: 6
   input:
     state_code: CA
-    eitc_child_count: 1
+    ca_eitc_child_count: 1
     employment_income: 6_400
     adjusted_gross_income: 6_400
   output:
@@ -30,7 +30,7 @@
   absolute_error_margin: 2
   input:
     state_code: CA
-    eitc_child_count: 0
+    ca_eitc_child_count: 0
     employment_income: 9_951
     adjusted_gross_income: 9_951
   output:

policyengine_us/variables/gov/states/ca/tax/income/credits/earned_income/ca_eitc.py

@@ -17,7 +17,7 @@ class ca_eitc(Variable):
     def formula(tax_unit, period, parameters):
         p = parameters(period).gov.states.ca.tax.income.credits.earned_income
 
-        child_count = tax_unit("eitc_child_count", period)
+        child_count = tax_unit("ca_eitc_child_count", period)
 
         phase_in_rate = p.phase_in.rate.calc(child_count) * p.adjustment.factor
         phase_in_max_income = p.earned_income_amount.calc(child_count)

policyengine_us/variables/gov/states/ca/tax/income/credits/earned_income/ca_eitc_child_count.py

@@ -0,0 +1,29 @@
+from policyengine_us.model_api import *
+
+
+class ca_eitc_child_count(Variable):
+    value_type = int
+    entity = TaxUnit
+    label = "CalEITC qualifying children"
+    definition_period = YEAR
+    documentation = """
+    Number of otherwise qualifying children who meet the CalEITC
+    identification requirement. Beginning in 2020, California accepts an
+    ITIN or SSN rather than requiring a work-valid SSN. Earlier years use
+    the federal EITC child count.
+    """
+    reference = (
+        # AB 1876, section 1, R&TC 17052(p): ITIN or SSN from 2020.
+        "https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB1876",
+        # FTB 3514, Step 1 question 3 and Line 7: qualifying children's IDs.
+        "https://www.ftb.ca.gov/forms/2020/2020-3514-instructions.html",
+    )
+
+    def formula(tax_unit, period, parameters):
+        return tax_unit("eitc_child_count", period)
+
+    def formula_2020(tax_unit, period, parameters):
+        person = tax_unit.members
+        is_child = person("is_eitc_qualifying_child", period)
+        has_tin = person("has_tin", period)
+        return tax_unit.sum(is_child & has_tin)