Embedded tax tool

April is a tax tech startup building embeddable tax products, and partnering with fintechs and banks to deliver tax filing wherever users are making other financial decisions. In my time at April, I worked primarily on the tax filing experience which was an exercise in optimization and managing complex flows. However, outside of tax season, I was asked to help expand April’s suite of products, in what became the Refund Estimator and Withholding Optimizer. The Refund Estimator, is an embeded product that uses a mix of shared partner data and user inputs, to estimate what a users return migth look like at the end of the year. The Withholding Optimizer could be sold as an add on, and involved one additional step where the user could adjust their paycheck withholding to change their tax outcome.

A big hurdle for any startup building products related to tax filing, is the seasonality of the business. Who wants to think about taxes when it’s not tax season? No one really does. But only engaging users and partners for a few months a year is not sustainable for a startup when you look at incumbents in the like Intuit or H&R block with diversified product offerings.

We set out to build a complimentary product, supported by the same tech running our tax engine which focused us in the area of tax estimation and tax withholding adjustments. We wanted to build a product that we could target towards payroll companies, and we built our MVP to secure a deal with Gusto.

In the first year after launch, we had over 10k users who had estimated/adjusted their withholdings, and had begun work on a V2 estimator that would cover use cases outside of payroll providers.

When I spoke with users, almost all who had worked a full-time job knew vaguely about a form W-4, but familiarity was where their understanding stopped. Most had no idea how to fill out the form, or that you could make changes to that form at any point in the year. Furthermore many didn’t realize that was one of the major contributing factors to their tax situation at the end of the year.

Additionally, most users that had received a large tax refund, didn’t know that they didn’t need to wait for the end of the year to get that money and that they could withhold less, and get a larger paycheck.

The final challenge was how do we build a product that is a fast enough flow to not see too many users drop mid flow, but still collect enough information to form an accurate estimate.