Social security taxes on wages and business income are imputed for the states that have a deduction for that tax. Anything not listed above becomes a zero on the Form 1040. Zero is always a valid entry, although it may be inaccurate. Formerly we did an imputation for rent when property taxes were less than one percent of income. This has been dropped.
Refundable credits appear as negative liabilities.
In many cases the marginal rate of tax taken from schedule X, Y or Z of the form 1040 correctly characterizes the tax wedge. But for many taxpayers, their effective marginal rate is affected by a phase-out or other special provision of the tax code. We maintain a list of significant notches that we have noticed. Although notches generally involved very small sums of money, they could have disproportionate effects on the results of a linear regression, which is sensitive to the squared difference of any observation from the mean. Some arose from actual notches in the tax laws.