KY separate/combined 2025 8page 66sage 36Kpwages 1Kswages 1Kintrec

[feenberg]

See http://taxsim.nber.org/out2psl/1071

This taxpayer prefers separate/combined however that does mean they lose the non-refundable $40 personal exemption credit for the elderly, since the one with taxable income is the younger one. See lines 17 and 18 of Form 740.

[PavelMakarchuk]

Confirmed — PolicyEngine bug, you're right about the $40. Filed as PolicyEngine/policyengine-us#9010.

PE correctly elects the combined-separate return (Form 740 status 2; pre-credit column tax 1,353.50 beats joint 1,453.06), but then pools the 66-year-old spouse's $40 over-65 credit at the unit level and nets it against total tax. Form 740 computes lines 16–18 per column with a per-column zero floor ("If line 17 is larger than line 16, enter zero"), and Schedule ITC Section B lines 10–11 assign each spouse's own credit to their own column — so the $40 dies in her near-zero column, exactly as TaxAct's return shows. Three-engine result: TaxAct $1,354 / TAXSIM-35 $1,353.50 (identical under default and opt30) / PE $1,313.50.

Same class as the Delaware Filing-Status-4 fix (PolicyEngine/policyengine-us#8978): own personal credits are fixed per column, and the separate-vs-joint election should be judged on post-credit liability. Fix in progress on the PE side; no emulator change needed.