Add disabled adult dependent care expenses to the CDCC base

changelog.d/cdcc-expense-distribution.fixed.md

@@ -0,0 +1 @@
+Add care expenses for a disabled adult dependent or spouse to the Child and Dependent Care Credit base, via a new care_expenses input, so a disabled qualifying individual age 18 or older is no longer attributed $0 of care expenses; the federal credit and its state mirrors (e.g. Kansas) previously returned $0 in this case.

policyengine_us/tests/policy/baseline/gov/irs/credits/cdcc/cdcc_relevant_expenses.yaml

@@ -24,3 +24,19 @@
     min_head_spouse_earned: 8_000
   output:
     cdcc_relevant_expenses: 5_000
+
+- name: Adult dependent care expenses add to the childcare base
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    people:
+      person1:
+        pre_subsidy_care_expenses: 2_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        tax_unit_childcare_expenses: 1_000
+        cdcc_limit: 6_000
+        min_head_spouse_earned: 10_000
+  output:
+    cdcc_relevant_expenses: 3_000  # 1_000 childcare + 2_000 adult care

policyengine_us/tests/policy/baseline/gov/irs/credits/cdcc/integration.yaml

@@ -95,3 +95,36 @@
   output:  # expected results from patched TAXSIM35 2023-01-13 version
     taxsim_tfica: 11_130.24
     income_tax: 24_507.2
+
+- name: Disabled adult dependent's care expenses reach the CDCC via care_expenses
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income: 40_000
+        is_tax_unit_head: true
+      person2:  # earning spouse: the earned-income test passes without deemed income
+        age: 38
+        employment_income: 30_000
+        is_tax_unit_spouse: true
+      person3:  # disabled adult dependent: care billed as adult care, not childcare
+        age: 18
+        is_incapable_of_self_care: true
+        is_tax_unit_dependent: true
+        pre_subsidy_care_expenses: 6_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: KS
+  output:
+    # The childcare pipeline is untouched (no children under 13); the adult-care
+    # expense enters the CDCC base via care_expenses.
+    tax_unit_childcare_expenses: 0
+    care_expenses: [0, 0, 6_000]
+    cdcc_relevant_expenses: 3_000  # min(6_000, $3,000 cap for one individual, earnings)
+    cdcc: 600  # 20% x 3_000 at $70,000 joint AGI

policyengine_us/tests/policy/baseline/gov/states/ks/tax/income/ks_cdcc.yaml

@@ -5,3 +5,32 @@
     state_code: KS
   output:
     ks_cdcc: 0.25 * 1_000
+
+- name: Disabled adult dependent's care expenses count toward Kansas CDCC
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income: 40_000
+        is_tax_unit_head: true
+      person2:
+        age: 38
+        employment_income: 30_000
+        is_tax_unit_spouse: true
+      person3:
+        age: 18
+        is_incapable_of_self_care: true
+        is_tax_unit_dependent: true
+        pre_subsidy_care_expenses: 6_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: KS
+  output:
+    cdcc: 600  # federal credit, fed by the adult-care expense
+    ks_cdcc: 300  # Kansas share of the federal credit

policyengine_us/tests/policy/baseline/household/expense/childcare/care_expenses.yaml

@@ -4,3 +4,8 @@
     pre_subsidy_care_expenses: 100
   output:
     care_expenses: 100
+
+- name: Care expenses default to zero
+  period: 2024
+  output:
+    care_expenses: 0

policyengine_us/variables/gov/irs/credits/cdcc/cdcc_relevant_expenses.py

@@ -13,7 +13,14 @@ class cdcc_relevant_expenses(Variable):
     )
 
     def formula(tax_unit, period, parameters):
-        expenses = tax_unit("tax_unit_childcare_expenses", period)
+        # Section 21 employment-related expenses cover care for any qualifying
+        # individual: childcare for children under 13
+        # (tax_unit_childcare_expenses) plus care for a disabled qualifying
+        # individual of any age — a disabled adult dependent or spouse
+        # (care_expenses, a person-level monthly input summed to the year).
+        childcare = tax_unit("tax_unit_childcare_expenses", period)
+        adult_care = add(tax_unit, period, ["care_expenses"])
+        expenses = childcare + adult_care
         cdcc_limit = tax_unit("cdcc_limit", period)
         eligible_capped_expenses = min_(expenses, cdcc_limit)
         # cap further to the lowest earnings between the taxpayer and spouse

policyengine_us/variables/household/expense/childcare/care_expenses.py

@@ -4,11 +4,12 @@
 class care_expenses(Variable):
     value_type = float
     entity = Person
-    label = "Care expenses"
+    label = "Care expenses for a disabled adult dependent or spouse"
     unit = USD
-    definition_period = MONTH
+    definition_period = YEAR
+    reference = "https://www.law.cornell.edu/uscode/text/26/21#b_2"
 
     def formula(person, period, parameters):
+        # No public subsidy applies to adult dependent care, so this passes
+        # through the pre-subsidy amount (mirrors childcare_expenses).
         return person("pre_subsidy_care_expenses", period)
-
-    # Add subsidies in a .yaml file once added to the model

policyengine_us/variables/household/expense/childcare/pre_subsidy_care_expenses.py

@@ -4,6 +4,7 @@
 class pre_subsidy_care_expenses(Variable):
     value_type = float
     entity = Person
-    label = "Pre subsidy care expenses"
-    definition_period = MONTH
+    label = "Pre-subsidy care expenses for a disabled adult dependent or spouse"
+    definition_period = YEAR
     unit = USD
+    reference = "https://www.law.cornell.edu/uscode/text/26/21#b_2"