OH income tax difference with TAXSIM35

[martinholmer]

The following integration test fails. It is not yet known whether the
tax logic problem is in TAXSIM35 or in the current PEUS code, or
whether there are problems in both models. This topic is meant to
facilitate discussion of why this test fails, primarily by reporting
the results of hand calculations required to fill out the relevant tax
form.

- name: Tax unit with taxsimid 82220 in f21.its.csv and f21.ots.csv
  absolute_error_margin: 0.01
  period: 2021
  input:
    people:
      person1:
        age: 62
        employment_income: 57010
        taxable_interest_income: 5505.0
        taxable_private_pension_income: 6000.0
        social_security_retirement: 6500.0
        ssi: 0  # not in TAXSIM35
        state_supplement: 0  # not in TAXSIM35
        wic: 0  # not in TAXSIM35
        ma_covid_19_essential_employee_premium_pay_program: 0  # not in TAXSIM35
      person2:
        age: 62
        taxable_interest_income: 5505.0
        taxable_private_pension_income: 6000.0
        social_security_retirement: 6500.0
        ssi: 0  # not in TAXSIM35
        state_supplement: 0  # not in TAXSIM35
        wic: 0  # not in TAXSIM35
        ma_covid_19_essential_employee_premium_pay_program: 0  # not in TAXSIM35
      person3:
        age: 16
        ssi: 0  # not in TAXSIM35
        state_supplement: 0  # not in TAXSIM35
        wic: 0  # not in TAXSIM35
        ma_covid_19_essential_employee_premium_pay_program: 0  # not in TAXSIM35
      person4:
        age: 16
        ssi: 0  # not in TAXSIM35
        state_supplement: 0  # not in TAXSIM35
        wic: 0  # not in TAXSIM35
        ma_covid_19_essential_employee_premium_pay_program: 0  # not in TAXSIM35
      person5:
        age: 16
        ssi: 0  # not in TAXSIM35
        state_supplement: 0  # not in TAXSIM35
        wic: 0  # not in TAXSIM35
        ma_covid_19_essential_employee_premium_pay_program: 0  # not in TAXSIM35
    tax_units:
      tax_unit:
        members: [person1, person2, person3, person4, person5]
        premium_tax_credit: 0  # not in TAXSIM35
        local_income_tax: 0  # not in TAXSIM35
        state_sales_tax: 0  # not in TAXSIM35
        ca_use_tax: 0  # not in TAXSIM35
        il_use_tax: 0  # not in TAXSIM35
        nm_2021_income_rebate: 0  # not in TAXSIM35
        nm_additional_2021_income_rebate: 0  # not in TAXSIM35
        nm_supplemental_2021_income_rebate: 0  # not in TAXSIM35
        ny_supplemental_eitc: 0  # not in TAXSIM35
        ok_use_tax: 0  # not in TAXSIM35
        pa_use_tax: 0  # not in TAXSIM35
        vt_renter_credit: 0  # not in TAXSIM35
    spm_units:
      spm_unit:
        members: [person1, person2, person3, person4, person5]
        snap: 0  # not in TAXSIM35
        tanf: 0  # not in TAXSIM35
    households:
      household:
        members: [person1, person2, person3, person4, person5]
        state_fips: 39  # OH
  output:  # expected results from patched TAXSIM35 2024-02-15 version
    oh_income_tax: 1725.98

[PavelMakarchuk]

@martinholmer The output of TaxSim and PE aligns until the tax calculation with no credits present in both models.

TAXSIM estimates income tax of $352 lower than PE. This leads to wonder whether TAXSIM modeled the tax rates as seen above but has not accounted for the case that the first 25,000 are taxed if the income exceeds that threshold.

rates

Let me know if the assumption makes sense

Both PE and TAXSIM agree on $70,520 of taxable income which then would account a tax of $1,725.97

[martinholmer]

@PavelMakarchuk said in discussion topic #3916:

TAXSIM estimates income tax of $352.60 lower than PE. This leads [me] to wonder whether TAXSIM modeled the tax rates as seen above but has not accounted for the case that the first 25,000 are taxed if the income exceeds that threshold.

I don't understand why you are wondering. The PESU .trace and the TAXSIM .out files I sent you show that OH income tax before credits is the same in the two models. The OH income tax difference comes from PEUS giving this case $352.60 in credits while TAXSIM gives this case no credits.

Please fill out the appropriate forms/worksheets to show which model is correct.

[PavelMakarchuk]

@martinholmer makes sense, getting lost in the files.
Regarding the credits:

First credit:
PE assigns this taxunit a retirement credit of $200
While there are some structural changes I am making in #3959 to the retirement credit, I believe it should still be applied:
Modified AGI: $80,020 (PE and TAXSIM)
Pension income: $12,000


I believe the taxunit should be eligible for the credit

The second credit is the joint filing credit:
Eligibility: over $500 of income which is met

While MAGI (equal to AGI in this case) less exemptions is $70,520, (PE and TAXSIM agree on the amounts), this would result in a credit amount of 10% of line 11 of the credit schedule.

This is the tax on the taxable less certain credit (which will not outweigh the tax liability in this case)

Tax Form

The main way of me being misguided here is if the taxable pension income is not included in either credit computation which I do not see any evidence here.

Let me know you thoughts