Varo Bank is offering free tax preparation and filing services to its customers through a partnership with embedded tax provider Column Tax, the lender announced Tuesday.
Varo, which claims to be the first nationally chartered U.S. bank to offer the service for free, said all account holders can connect financial information to their tax prep and file comprehensive tax returns through their Varo Bank application.
“Varo strives to improve the financial lives of our customers,” Colin Walsh, CEO and founder of Varo Bank, told Banking Dive via email. “From providing a free, secure alternative to money transfer apps to now providing free tax preparation and filing from within your banking app. Both of these innovations have happened within the last few months: this is the new pace of banking innovation, with much more to come.”
The lender said customers have expressed their concern when it comes to filing taxes every year, saying it is among the most stressful financial events of the year. Based on customer feedback and research, Varo developed a tax filing service to help customers file faster and get faster returns at no cost.
“Our customers are our source of truth for all of our banking products,” the bank said.
Varo has opened around 5 million checking accounts and millions of savings and lending accounts since its inception, the company said.
The digital-only bank claims that with data pre-filled based on information users share with the bank and modern technology, the tax filing process would take around 15 minutes from when the customers start filling out the form to when they submit it. Customers can receive assistance from artificial intelligence-powered chatbots and on-call support from tax experts through Column Tax if required, the company said.
“By reducing the tax filing process to as little as 15 minutes and for free, we’re helping Varo Bank to maximize its customers’ returns with the satisfaction that comes with maximum refund and accuracy guarantees,” Column Tax co-founder Gavin Nachbar said in a statement Wednesday.
Column Tax is a popular choice among fintechs looking to offer tax filing services to its customers.
Current, a fintech platform providing mobile banking services, announced its members with a payroll could file taxes for free directly through the app backed by Column Tax and get access to refunds up to five days early. The fintech claims that most members can file tax returns in less than 20 minutes regardless of the number of jobs they have worked.
In February, fintech MoneyLion partnered with Column Tax to offer its customers with RoarMoney Banking accounts access to free tax filing services.
Taxpayers are often tricked into paying money for services that are otherwise free. Every year, taxpayers spend around $104 billion in preparing and submitting tax returns, according to the National Taxpayers Union Foundation.
Last year, New York Attorney General Letitia James announced a $141 million settlement for consumers tricked by TurboTax’s owner, Intuit, into paying for free tax services.
Varo’s latest partnership with Column Tax would be available to its customers around Jan. 8, 2024, to file federal and state tax returns, according to the company website. Additionally, users who file their taxes with the Varo Bank app will get their return up to five days early, the company noted.
Varo said it is the first bank to launch the tax filing service since it is “focused on bringing together the financial products needed most to help [its] users. Other banks are not historically positioned as well as Varo to help all Americans get access to a new service like this at no cost.”