NM 2024 joint 65Kdividend 20Kintrec 390Kltcg 33kpensions cnf

[feenberg]

NM 2024 joint 65Kdividend 20Kintrec 390Kltcg 33kpensions

See http://taxsim.nber.org/out2psl/nm10

Taxable income in TA is 324263 while PE shows 252464. The difference is 29201, reminding me of the standard deduction.

[PavelMakarchuk]

@feenberg I think the attached TA forms reference New Mexico - can you add the SC files

[feenberg]

Sorry It is the heading that is wrong. The files are consistently about NM.

[PavelMakarchuk]

@feenberg this is case where it is optimal for the filer to not optimize based on federal tax liability which is what we are doing now.

[feenberg]

I don't understand your comment. The stata and also the total tax is less in TA than PE, by almost $10,000. TA uses the standard deduction. Summarizing the liabilities in each calculator:

              TA          PE
federal    70343        78228
state      15573        17296

total      85916        95524

I have rerun TA and PE and all the files in http://taxsim.nber.org/out2psl/nm10 are new.

[PavelMakarchuk]

Dug into the federal-tax gap further — the source is PE-US's AMT computation, not the itemize decision.

Forcing PE to use the standard deduction (matching TaxAct) and tracing through Form 6251 Part III: PE applies the 20% capital gains rate to $252,789 of the AMT preferential-rate base, even though the AMT base (AMTI − exemption = $376,452) sits well below the 2024 MFJ 20% threshold of $583,750. Per Form 6251, tentative AMT should be ~$42,360 here, which is less than the regular tax of $60,473 — so AMT add-on should be $0, not $8,634.

Filed as policyengine-us#8292 with reproducer, trace, and integration test. Once the AMT bug is fixed, PE's tax_liability_if_not_itemizing should drop ~$8K and the itemize-vs-standard decision (and the federal/state totals) should align with TaxAct.

[PavelMakarchuk]

Verified fully fixed in current PE. The AMT bug filed at policyengine-us#8292 has been resolved in amt_tax_including_cg.py — the spurious 20% bracket application is gone. Re-running this case:

Variable	TaxAct	Current PE
Federal income tax	$70,343	$70,344
NM income tax	$15,573	$15,574
AMT	$0	$0
Itemizes?	False	False ✓
Total tax	$85,916	$85,918

The chain Pavel identified earlier ("optimal for the filer to not optimize based on federal tax liability") was downstream of the AMT bug — once AMT no longer spuriously adds $8,634 to the standard-deduction branch, tax_unit_itemizes correctly picks standard.

[PavelMakarchuk]

Correction: the AMT fix is in policyengine-us#8293, which is open, not yet merged. The numbers I posted above are from a local PE-US checkout on the fix branch. Will close once #8293 merges and a PE-US release ships with it. Apologies for the premature close.