Wouldn’t it be nice to have an app always running silently in the background — calculating and updating your tax deductions, credits, and payment responsibilities 24/7 — so that when tax time rolls around, all you need to do is push a button, have everything totaled, and ready to send to the IRS?
What a burden off one’s shoulders that would be. And, yes, that is now possible. The app is here.
Startup FlyFin’s new AI-powered mobile tax app launched today and is aimed primarily at the 70 million freelancers, gig workers, and self-employed in the U.S., although it would work for anyone. This fintech cloud-service provider is dead set on disrupting the market for individual tax preparation and filing, which hasn’t encountered anything like this previously.
This new AI tax engine replaces the self-employed and freelancers’ hassles with simplicity and money savings, CEO Jaideep Singh said. It handles 95% of the work through smart AI and ML technology, then adds the human expertise of real CPAs who review and ensure 100% accuracy, Singh said.
How it works for users
Users simply download the app and link their accounts to start tracking expenses. FlyFin’s AI engine automatically scans expense accounts daily to suggest which category to classify the expense based on profession. FlyFin’s AI and CPAs then find all possible tax deductions. Users also have access to the domain expertise of the company’s full-time tax CPAs, who review each individual’s tax information and provide expert help to maximize savings. Users then have the option to file their taxes with FlyFin’s CPAs, who ensure accurate tax review and preparation, or to export their data in an IRS-ready format, Singh said.
As part of its launch, FlyFin also introduced additional services bundled into its plans. They are:
- Comprehensive tax report: An in-depth analysis and report produced by analyzing all the user’s expenses to figure all the areas and specific deductions that they can take to maximize their tax savings. The custom tax report is generated with the help of AI and is entirely reviewable by CPAs. The average value for a service like this is $499, but FlyFin will provide it free for subscribers opting for standard and premium plans, Singh said.
- Full audit insurance: This insurance provides comprehensive management of any IRS or state tax notice or “audit” requesting to review a tax filing. FlyFin’s CPA team will review, research, respond, and represent a user with the IRS from start to finish. This guarantee is typically a $150 value that standard and premium subscribers receive for free, Singh said.
How it works under the hood
For IT managers, software architects, and engineers who are interested in understanding how FlyFin’s inside tech works, here are some data points.
VentureBeat: What AI and ML tools are you using specifically?
FlyFin: We use a variety of AI/ML & NLP tools & libraries such as TensorFlow, NLTK, SpaCy, etc.
VentureBeat: Are you using models and algorithms out of a box — for example, from DataRobot or other sources?
FlyFin: Our models are both proprietary and out of the box. Our problems are specific to finance, accounting, and tax, and therefore we can’t just use generalized language-based models.
VentureBeat: What cloud service are you using mainly?
FlyFin: We use AWS & Azure.
VentureBeat: If you are using AWS and Azure, does that mean you’re using a lot of the AI workflow tools that come with those services — for example, AWS’s SageMaker?
FlyFin: Not exactly. We use a lot of AWS services, but for AI we use a combination of in-house and other platforms for specific problems.
VentureBeat: How much do you do yourselves?
FlyFin: We do extensive custom work, but have built our IP on top of lots of open source building blocks.
VentureBeat: How are you labeling data for the ML and AI workflows?
FlyFin: We have in-house labelers and processes to handle our information pipeline.
VentureBeat: Can you talk about how much data you are processing?
FlyFin: The problem is a very large and dynamic one, and our models have processed hundreds of millions of data points thus far, which is a very significant achievement for our industry.
Tax preparation for the side hustle
FlyFin aims to disrupt the $23 billion individual tax preparation market in the U.S., Singh said. The pandemic has permanently altered businesses that must adapt to remote work, accelerating their plans to hire more freelancers. The most common type of freelance work is in skilled services, with 45% of freelancers providing programming, marketing, and other consulting work, according to an Upwork 2019 report.
In 2007, Singh cofounded Spock, the market’s first people search engine and an early adopter of AI; the service indexed over 1 billion people representing more than 1.5 trillion data records. He has founded or funded several companies in Silicon Valley and India.
FlyFin offers three plans (basic, standard, and premium) that vary in service and features provided, with pricing at $7, $16, and $29, respectively. The app is available on iOS and Android. For iPhone or iPad users, the app requires iOS 11.0 or later. A desktop version is also available for Macs with an Apple M1 chip.
A survey by IPX 1031 reported that more than 33% of all tax filers wait until the last minute to tackle their taxes, with millennials procrastinating the most. Why? Tax prep is painful, complicated, confusing, and overwhelming. In the next five years, Statista predicted, freelancing will comprise approximately 51% (86.5 million workers) of the U.S. workforce.
“All of us that have itemized tax deductions — you know, it’s complicated,” Singh told VentureBeat. “It still takes me a whole weekend to put together all my expenses in the spreadsheet, find my receipts, download stuff from Amex and CapitalOne, BofA, and all that stuff. And I realized that this is a real pain point.
“But the penny really dropped for me when I realized the entire creator economy, all the youngsters out of college, 50% of Gen Z and millennials, all have some kind of side gig or are independently employed, whether they’re doing an Uber or the white-collar workers being designers and software engineers. They’ve got some side hustle, and they’re making money. So I realized that they all have schedule C’s on their 1040s, and that’s a real pain.”
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