April introduces a built-in tax estimator for Gusto's clientele

In a groundbreaking move, payroll and HR technology company Gusto has partnered with tax fintech company April to launch an embedded tax refund estimator. This collaboration aims to bring a new level of convenience and accuracy to tax management for employees of over 300,000 Gusto client businesses.

According to the Internal Revenue Service, the average American overpaid $3,100 on their taxes last year. With this in mind, the partnership between Gusto and April is set to provide a solution, allowing any American to understand their tax position at any time.

Ben Borodach, co-founder and CEO of April, stated that many people don't know how to adjust their tax withholdings or that a W-4 is used for this purpose. He believes that the next innovation in tax software will be from digital to intelligent, and that AI will significantly impact the future of tax management.

The product brings April's tax tools, which use machine learning, to the employees of Gusto's client businesses. The tax estimator allows Gusto users to estimate their federal taxes and adjust withholdings accordingly. The partnership also informs employees if tax credits or deductions could affect their year-end tax liability or refund.

The Gusto-April partnership gives employees an understanding of their federal tax standing based on their earnings and withholdings. This transparency is expected to lead to more informed decisions and potentially save employees money come tax time.

April itself launched earlier this year with 12 inaugural partners, including Acorns and Mercury Financial. The statement does not mention the purchase of licensing rights, suggesting a collaborative approach to the development and implementation of the tax estimator.

The collaboration between Gusto and April is part of a larger trend towards embedding financial services within everyday apps. JPMorgan Chase announced in September that it would offer small and midsize businesses embedded payroll services powered by Gusto. This move is expected to streamline financial management for businesses and their employees.

Borodach asserts that generative AI can speed up the development of new tax products tailored to different market segments. He suggests that new solutions are needed to change the retrospective tax paradigm, and the partnership between Gusto and April is a step in that direction.

In conclusion, the partnership between Gusto and April represents a significant leap forward in tax management. By leveraging AI technology, the partnership aims to provide employees with a more accurate, real-time understanding of their tax situations, ultimately leading to more informed decisions and potential savings.