cohabitating_spouses defaults False for married couples, picking the wrong AZ property tax credit table

[PavelMakarchuk]

Summary

cohabitating_spouses is a no-formula input defaulting to False, so a married-filing-jointly couple living together is treated as not cohabitating. For the Arizona property tax credit (Form 140PTC) this selects the wrong statutory table, roughly quartering the credit.

Originating TAXSIM comparison: PolicyEngine/policyengine-taxsim#983

Legal basis

ARS §43-1072(A)(3) defines two categories: a claimant who "did not live with a spouse or any other persons" uses Table 1 (§43-1072(B)(1)); one who "lived with a spouse or one or more persons" uses Table 2 (§43-1072(B)(2)). A married couple living together falls under Table 2.

For Table 2, ARS §43-1072(B)(2) gives household income 3,551–3,700 → $323.

Root cause

az_property_tax_credit selects the table via tax_unit("cohabitating_spouses"), but cohabitating_spouses has no formula and defaults to False. So a joint couple uses the living-alone Table 1.

Reproduction (AZ MFJ, both age 75, $3,638 household income, $9,059 rent, TY2025)

	cohabitating_spouses	az_property_tax_credit
Current default	False	$78 (Table 1)
Correct (spouse present)	True	$323 (Table 2)

$323 is confirmed three ways: ARS §43-1072(B)(2) table, PE's own Table 2 parameter, and the reporter's filled 2025 Form 140PTC. The credit is capped by property tax + rent ($9,059), which exceeds $323, so $323 binds.

Suggested fix

Either make cohabitating_spouses default to True when a spouse is present in the tax unit, or have az_property_tax_credit check spouse presence directly rather than relying on the unset input.

Integration test

- name: AZ property tax credit uses the cohabitating (Table 2) schedule for a married couple
  period: 2025
  input:
    people:
      head: {age: 75, taxable_interest_income: 3_637.87, rent: 9_059.32}
      spouse: {age: 75}
    tax_units: {tax_unit: {members: [head, spouse]}}
    households: {household: {members: [head, spouse], state_code: AZ}}
  output:
    az_property_tax_credit: 323