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There are different simplify functions. Try this:
sage: var('a b')
(a, b)
sage: f = ((a + b)^2 - a^2 - 2*a*b - b^2)
sage: f.simplify() # as you had
(a + b)^2 - a^2 - 2*a*b - b^2
sage: f.simplify_full()
0
