Jack is a law-abiding US citizen who was filing his first taxes at age 21. He put his information into a free online e-filer and got the shock of his life. Jack only had \$3000 in income - but the return said that he owed \$2800 in taxes! How was this possible?


closed as too broad by Deusovi, JGreenwell, Spencerkatty, f'', Mike Earnest Mar 4 '16 at 3:13

Please edit the question to limit it to a specific problem with enough detail to identify an adequate answer. Avoid asking multiple distinct questions at once. See the How to Ask page for help clarifying this question. If this question can be reworded to fit the rules in the help center, please edit the question.

  • $\begingroup$ Did his parents file any taxes on his behalf before him? $\endgroup$ – Joe Z. Mar 4 '16 at 0:37
  • $\begingroup$ I have some ideas... but I would like to see how wacky our country can be from the creative thinkers here. $\endgroup$ – LN6595 Mar 4 '16 at 0:40
  • $\begingroup$ well, given that the question is now closed, what was the answer you were thinking of? $\endgroup$ – Joe Z. Mar 4 '16 at 20:20

The first answer that comes to my mind is that Jack is a storekeeper who owes sales taxes. Even though his net income after deductions is only \$3,000, his gross sales could be around \$40,000, which had \$2,800 (7%) of unremitted sales taxes collected on it, and out of which \$37,000 was deducted as cost of goods sold and other business expenses.

  • $\begingroup$ (assuming that this is in a state with 7% income tax. Figures might be different.) $\endgroup$ – Joe Z. Mar 4 '16 at 0:40
  • $\begingroup$ He did say "how is this possible," not give me an absolute perfect explanation. $\endgroup$ – Z. Dailey Mar 4 '16 at 7:42

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