Count Missouri's self-employment tax deduction net of the federal AGI deduction

changelog.d/mo-se-tax-addback.fixed.md

@@ -0,0 +1 @@
+Limit Missouri's itemized deduction for self-employment tax to the part the filer didn't deduct in computing federal adjusted gross income (RSMo 143.141(4)(c)).

policyengine_us/parameters/gov/states/mo/tax/income/deductions/itemized.yaml

@@ -7,7 +7,8 @@ values:
     - employee_social_security_tax
     - employee_medicare_tax
     - additional_medicare_tax
-    - self_employment_tax
+    # RSMo 143.141(4)(c): only the part not deducted in federal AGI.
+    - mo_self_employment_tax_addback
 metadata:
   unit: list
   label: Missouri itemized deduction sources

policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_itemized_deductions.yaml

@@ -113,3 +113,37 @@
     state_code: MO
   output:
     mo_itemized_deductions: 10_000
+
+# Single filer, $100,000 of self-employment income and $20,000 of cash
+# charity. The filer owes 14,129.55 of self-employment tax and deducts half
+# (7,064.775) in computing federal AGI, so Missouri allows the other half as
+# an itemized deduction (RSMo 143.141(4)(c)). With the charity, itemized
+# deductions total 27,064.775, and the 0.01 margin covers either rounding of
+# the half cent. If the model counted the full tax, they would total 34,129.55.
+- name: 2017 self-employment tax counted net of the federal AGI deduction
+  period: 2017
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head: {age: 40, self_employment_income: 100_000, charitable_cash_donations: 20_000}
+    tax_units: {tax_unit: {members: [head]}}
+    households: {household: {members: [head], state_code: MO}}
+  output:
+    self_employment_tax: 14_129.55
+    self_employment_tax_ald: 7_064.77
+    mo_self_employment_tax_addback: 7_064.77
+    mo_itemized_deductions: 27_064.78
+
+- name: 2024 self-employment tax counted net of the federal AGI deduction
+  period: 2024
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head: {age: 40, self_employment_income: 100_000, charitable_cash_donations: 20_000}
+    tax_units: {tax_unit: {members: [head]}}
+    households: {household: {members: [head], state_code: MO}}
+  output:
+    self_employment_tax: 14_129.55
+    self_employment_tax_ald: 7_064.77
+    mo_self_employment_tax_addback: 7_064.77
+    mo_itemized_deductions: 27_064.78

policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_self_employment_tax_addback.yaml

@@ -0,0 +1,66 @@
+# Missouri allows the self-employment tax as an itemized deduction only to the
+# extent the filer didn't deduct it in computing federal AGI (RSMo
+# 143.141(4)(c)). For 2017, filers include federal Form 1040 line 57 less
+# line 27 on Form MO-A Part 2 line 7 (MO-1040 instructions, page 42).
+- name: Half of the tax was deducted in federal AGI, so half is added
+  period: 2024
+  input:
+    self_employment_tax: 1_000
+    self_employment_tax_ald: 500
+    state_code: MO
+  output:
+    mo_self_employment_tax_addback: 500
+
+- name: Nothing deducted in federal AGI, so the addback equals the tax and no more
+  period: 2024
+  input:
+    self_employment_tax: 1_000
+    self_employment_tax_ald: 0
+    state_code: MO
+  output:
+    mo_self_employment_tax_addback: 1_000
+
+- name: Deduction above the tax leaves the addback at zero, not negative
+  period: 2024
+  input:
+    self_employment_tax: 1_000
+    self_employment_tax_ald: 1_200
+    state_code: MO
+  output:
+    mo_self_employment_tax_addback: 0
+
+- name: No self-employment tax
+  period: 2017
+  input:
+    self_employment_tax: 0
+    self_employment_tax_ald: 0
+    state_code: MO
+  output:
+    mo_self_employment_tax_addback: 0
+
+- name: Bounded between zero and the tax for several households at once
+  period: 2024
+  input:
+    people:
+      a: {self_employment_tax: 2_000}
+      b: {self_employment_tax: 2_000}
+      c: {self_employment_tax: 0}
+    tax_units:
+      ta: {members: [a], self_employment_tax_ald: 1_000}
+      tb: {members: [b], self_employment_tax_ald: 3_000}
+      tc: {members: [c], self_employment_tax_ald: 0}
+    households:
+      ha: {members: [a], state_code: MO}
+      hb: {members: [b], state_code: MO}
+      hc: {members: [c], state_code: MO}
+  output:
+    mo_self_employment_tax_addback: [1_000, 0, 0]
+
+- name: Outside Missouri the addback is zero
+  period: 2024
+  input:
+    self_employment_tax: 1_000
+    self_employment_tax_ald: 500
+    state_code: KS
+  output:
+    mo_self_employment_tax_addback: 0

policyengine_us/variables/gov/states/mo/tax/income/deductions/mo_self_employment_tax_addback.py

@@ -0,0 +1,26 @@
+from policyengine_us.model_api import *
+
+
+class mo_self_employment_tax_addback(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "Missouri itemized deduction for self-employment tax"
+    unit = USD
+    documentation = (
+        "Self-employment tax added to Missouri itemized deductions, net of the "
+        "part already deducted in computing federal adjusted gross income."
+    )
+    definition_period = YEAR
+    reference = (
+        "https://revisor.mo.gov/main/OneSection.aspx?section=143.141",
+        # PDF page 42: Form MO-A Part 2 line 7.
+        "https://dor.mo.gov/forms/MO-1040%20Instructions_2017.pdf#page=42",
+    )
+    defined_for = StateCode.MO
+
+    def formula(tax_unit, period, parameters):
+        # RSMo 143.141(4)(c): Missouri allows the tax only to the extent the
+        # filer didn't deduct it in computing federal AGI.
+        self_employment_tax = add(tax_unit, period, ["self_employment_tax"])
+        deducted = tax_unit("self_employment_tax_ald", period)
+        return max_(0, self_employment_tax - deducted)