Detective Deductible

Taxes suck.

I found out the hard way 2 years ago when I got audited by the IRS for not paying any income tax from my small business. I got a bill for $2000 plus interest/penalties and man was that a rough day. It wasn’t because I was trying to scam the government, but I honestly had no clue how taxes worked. I never learned about it in school and I spent my time playing Minecraft instead reading up on the Federal Tax Code to see what new deductions are available this year.

That's why we spent the past 36 hours working on Detective Deductible, a simple, cunning tool that helps average joes like me identify their current tax liability, just by looking at what they spend our money on!

Fill in a simple form that asks about basic questions like your income, student eligibility, number of children, and filing status. Then upload a file consisting of all the things you paid for in the last year, and Detective Deductible will harness the power of AI and its custom algorithm to calculate your end of year tax balance to see how much you owe or how much your refund is 🙂

Simple Right? Well behind the scenes it gets a lot more complex, here’s the inside scoop!

GPT-3 powers our payment classification model. So anytime you enter your payment history, our fine-tuned model will determine whether or not that payment may be eligible for a tax deduction or credit, and then determine what the following credit/deduction might be (we use our custom algorithm to figure out how much applies in your unique situation). So far our model supports the following deductions and credits:

American Opportunity Tax Credit (for broke college students like us!) State Taxes Paid Deduction Mortgage Interest Payment Deduction Medical and Dental Expense Deduction Cash Donations to Qualifying charities

We trained our model with 800+ rows of labeled training data and fine tuned the parameters until we achieved passable accuracy rates.

Our tax eligibility and calculation algorithm is built upon the foundations of the US Federal Tax Code (we did simplify cases for the sake of time; one could spend days, if not weeks, exploring the strange world of New York taxes being imposed on cream cheese and bagels). But we did get things pretty accurate when it comes to the deductions and credits that our model supported.

Whenever a payment gets classified our algorithm runs to check if you match the eligibility of claiming the deduction/credit and if you do, how much of that benefit you can actually receive. Deductions reduce your taxable income and Credits reduce your tax liability, and our algorithm will calculate the effects of both to determine your EOY tax tax liability.

Here's some terminology Detective Deductible wants to throw at you:

Standard Deduction vs Itemized Deductions

In the binary world of tax deductions you can choose the standard deduction or choose to itemize your deductions. The process we described above calculates your itemized deductions, these are deductions to your taxable income that involve multiple “items” like mortgage interest payments or losses or donations to charities. The standard deduction is a fixed amount that reduces your taxable income by $12950 no questions asked! (for single filers, $25,900 for joint filers $19,400 for heads of household)

This is an important consideration for determining your EOY tax liability because if your itemized deductions are less than the standard deductions you will be shooting your own wallet by choosing to itemize instead of taking the standard deduction. Because this is so important we factor this into our calculation and allow you to compare the difference in taxable income.

It’s been 36 hours since Detective Deductible has gotten any sleep and we don’t want to overwork him or we might run into some legal troubles. That's all for now, hope to see you at the demo!