- Small Business Trends - https://smallbiztrends.com -

Startup Helps You and Your Employees Deduct Pre-Tax Spending

Alice Pre-Tax Spending App Helps You and Your Employees Deduct Pre-Tax Spending

An application called Alice will help business and their employees take advantage of pre-tax spending [1] to the tune of hundreds or thousands of dollars every year.

A Peek at the Alice Pre-Tax Spending App

Alice [2] gets connected to the payroll of participating employers and once it is up and running, it monitors the pre-tax eligible items employees spend. The items can be everything from childcare related expenses to prescriptions, ride-sharing, parking, monthly train passes and more.

The savings also extend to the business. According to the company, Alice can save employers around 8% of every dollar spent pre-tax by their employees. It does this by lowering Social Security, Medicare, local taxes, and unemployment premiums a business would have to pay.

The pain point Alice has solved is removing the complexities of implementing this type of benefit by a company, especially a small business.

What is Pre-tax Spending?

According to Alice, there are 10 categories of everyday expenses which count toward pre-tax spending. The amount you spend in these categories is not taxed on your paycheck.



So when your employees spend more in pre-tax, the amount of money your company pays in Social Security, Medicare, local taxes, and unemployment premiums is lower, benefiting both parties.

Alice can increase the take-home pay of enrolled employees by an average of $583.06. This, of course, can be higher depending on how much the employee spends in eligible expenses.

Here is a full list of the eligible expenses.

Real World Math and Saving as Explained by the Company

Sarah



Sarah’s employer doesn’t have to pay the employer’s share of payroll taxes on the $1,472.17 she spent pre-tax. This results in a savings of $117.12 for the business.

So How Does the Company Get Paid?

Alice doesn’t have any setup or maintenance fees and out-of-pocket-costs to your business. It makes money by taking 50% of what you save on payroll taxes each pay period. On the employee side, Alice is free.

You can enroll here [3].

Image: Alice