Fix EITC/CDCC: allow SE losses to reduce earned income per IRS Worksheet B

[PavelMakarchuk]

Summary

• Removes the per-person max_(0, ...) floor from adjusted_earnings.py that incorrectly clipped self-employment losses, preventing them from reducing earned income
• Adds the zero floor at the tax-unit level in filer_adjusted_earnings.py, matching IRS EIC Worksheet B Line 4b: "If line 4b is zero or less, You can't take the credit"
• Adds test coverage for both SE loss scenarios and the tax-unit-level floor

Legal Authority

IRC 32(c)(2)(A)(ii): EITC earned income includes "the amount of the taxpayer's net earnings from self-employment for the taxable year (within the meaning of section 1402(a))". Per IRC 1402(a), net earnings can be negative ("income or loss").

IRS EIC Worksheet B (Form 1040 Instructions, Line 4b): "Combine lines 1e, 2c, 3, and 4a. This is your total earned income." — No per-component or per-person floor. "If line 4b is zero or less, You can't take the credit." — Floor applies only to the combined total.

IRS Form 2441 Instructions (CDCC, Lines 4-5): "You must reduce your earned income by any loss from self-employment."

Note: Pub 596's "don't subtract losses on Schedule C or F from wages" applies only to Form 4029 filers (religious exemption from SE tax), not to general EITC filers.

Example

MFJ couple: Head has $30,000 wages, Spouse has -$10,000 SE loss.

	Before (bug)	After (fix)	IRS Worksheet B
Head adjusted_earnings	$30,000	$30,000	$30,000
Spouse adjusted_earnings	$0 (clipped)	-$10,000	-$10,000
filer_adjusted_earnings	$30,000	$20,000	$20,000

Test plan

• New tests: adjusted_earnings.yaml (3 tests) — SE loss, positive SE, zero SE
• New tests: filer_adjusted_earnings.yaml (2 tests) — partial offset, full offset with floor
• All existing EITC tests pass (37 tests)
• All existing CDCC tests pass (37 tests)
• AMT exemption tests pass (5 tests)
• TAXSIM EITC contrib test passes
• State EITC/WFC tests pass (WA, MN, CA — 31 tests)

🤖 Generated with Claude Code

[codecov]

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 100.00%. Comparing base (fe9f829) to head (4f89885).
⚠️ Report is 30 commits behind head on main.

Additional details and impacted files

@@             Coverage Diff              @@
##             main     #7469       +/-   ##
============================================
+ Coverage   70.60%   100.00%   +29.39%     
============================================
  Files        3896         2     -3894     
  Lines       56278        22    -56256     
  Branches      277         0      -277     
============================================
- Hits        39735        22    -39713     
+ Misses      16542         0    -16542     
+ Partials        1         0        -1     

Flag	Coverage Δ
unittests	100.00% <100.00%> (+29.39%)	⬆️

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