Despite being the largest minority group in the U.S., the Hispanic community lacks a tax service in their native language. Raleigh-based startup RefundWiz is looking to change that.
For founder Simon Karmarkar, who will present at CED’s Venture Connect summit this week (March 29-30), providing tax services to immigrant communities is a deeply personal mission.
Himself an immigrant from South Asia, Karmarkar remembers his own family’s early encounters with the taxation system.
Soon after their family moved to the United States, his father brought a young Karmaker and his brother to look inside a tax-filing office. Quickly, the cushy seats and English-language signs indicated to Karmarkar’s father that this business was not designed to suit his family’s tax needs, a memory that he kept for decades.
“He looked at it and he said, ‘That’s so posh, that’s not for us,’” Karmarkar said. “I thought it was very fascinating that he would remember that so many years later.
The Karmarkar family received citizenship in 1976. But decades later, Hispanic immigrants face similar concerns while filing their taxes.
Karmarkar realized the inequities facing immigrant communities while working as a tax accountant for a larger firm, and began to do research on the side about the relationships that immigrants have had throughout the years with filing their taxes.
From Slavic immigrants in the 1950s to Hispanic immigrants today, Karmarkar found one stark similarity between these groups: for months of each year, these hard-working families struggled to do their taxes in a language they were unfamiliar with, all while fighting off a fear that incorrectly doing their taxes may lead to their untimely deportation.
“It is hard to describe that fear unless you’ve actually experienced it,” Karmarkar said. “Close your eyes and imagine you’ve moved to a new country with your family in hopes of chasing that dream. Then somebody says, ‘Oh, yeah, you also have to fill out your taxes.’ What happens if I make a mistake?”
By addressing cultural, language and financial barriers to tax-filing services, Karmarkar looks to provide the Latino community with the same kinds of resources his own family once lacked.
Karmarkar built out his user-facing app MásRefund, using code that was natively in Spanish. He recognizes that many in the Hispanic community face unique struggles when it comes to accessibility and time availability. MásRefund uses machine learning to make filing a refund as easy as clicking a few buttons and snapping a picture on a phone.
At a traditional tax firm, the price of filing multiple W-2s can quickly add up, especially for families that take out multiple jobs to make ends meet. But with MásRefund, those extra charges are “no más”—users pay a flat $25 fee when filing taxes, regardless of how many W-2s they are reporting.
“If somebody has five W-2s, they’re working so hard; the last thing you want to do is penalize them because they’re trying to maintain all these side jobs,” Karmarkar said. “With MásRefund you take a picture of a driver’s license, take a picture of your W-2s and it’s done. Your taxes are filed in less than five minutes.”
Ultimately, filing taxes incorrectly or inefficiently can cause Hispanic families to lose out on average 36-86% of the refunds that are due to them. These families lack adequate financial education catered to their language needs and sometimes bring with them a mistrust of financial systems from unstable economies or governments in their country of origin.
Many people from this demographic, Karmarkar said, use tax refunds as a “nest egg” for big purchases, but miss out on day-to-day money in their pockets due to incorrectly filed tax documents. With a median two-person annual income of around $55,000, this can mean families can literally miss out on thousands of dollars worth of benefits.
While MásRefund offers single-person filing today, it soon looks to expand to joint filing options for married couples. But Karmarkar doesn’t want to stop at tax refunds. From debit cards to financial advice in their native language, he hopes to expand access to the financial system at all levels for Hispanic families.
Karmarkar hopes to change how many in this demographic think about their place in the financial system by utilizing the principles of cognitive behavioral therapy.
A certified mental health counselor to treat addiction, Karmarkar alludes to his roots by calling the concept “mental wealth,” which he defines as changing users’ relationships with money and how they spend it.
“Instead of burning a hole in the pocket, let’s take a look at what we can store away, kind of like an acorn model,” Karmarkar said. “Let’s set aside $5 a paycheck, if you can’t do $5, let’s do $1, and then let your money work harder for you instead of you working harder for money. That is the concept of mental wealth.”
RefundWiz is about more than money. It’s about building generational wealth and security, and rewarding the hard work of one of this country’s hardest-working but most overlooked demographics.
For Karmarkar, too, RefundWiz is about so much more than money. It’s an opportunity to use his training to give back to an immigrant community that faces similar struggles to those of his own family.
“People say ‘We’d rather not even file taxes and get that money back just in case we make a mistake on the tax form,’ or ‘We’re gonna get our address will on it and then we’re gonna get deported,’” Karmarkar said. “This is a real fear that they have. All of these fears are so daunting, so crippling. It’s wonderful to say that there is a solution.”