A New York-based startup trying to help American employees keep track of pre-tax eligible expenses is bringing an average of $583 back into their bank accounts each year. Pre-tax spending - money that is not taxed on paychecks, such as childcare costs and parking expenses - has been around for decades, but many employees have stayed away from monitoring it, citing the pain of navigating Flexible Spending Accounts, Health Savings Accounts, and other employee savings plans.
The startup, called Alice, is automating pre-tax spending for hundreds of employers in the United States Alice connects to the payrolls of participating employers in a process that takes less than 15 minutes, Alice co-founder Avi Karnani told Business Insider. After an employee connects a credit or debit card to the system, they receive messages anytime Alice flags a purchase as pre-tax eligible. The software then adjusts payrolls based on employees' responses.
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