5 Ways AI Can Help You with Your Taxes (and What Not to Use It For)
As tax season approaches, many people are looking for ways to simplify the process and reduce their workload. Artificial intelligence (AI) has the potential to revolutionize the way we approach taxes, but it’s essential to understand what AI can and cannot do.
Use AI Features Available in Tax Prep Software
Tax programs like TurboTax and H&R Block tax software now offer varying degrees of AI assistance for your tax preparation. Don’t expect your tax preparation software to do all the work for you, but it can help save time and provide some quick assistance. Intuit has several AI-related offerings that are part of their TurboTax product, including auto-filling tax form fields, checking forms for accuracy, and recommending deductions.
Use AI Features in Expense Tracking Software
Not all expense tracking services offer AI features, but Fyle, SparkReceipt, and QuickBooks do. Fyle’s Conversational AI for Expense Tracking allows you to snap a picture of your receipts with your phone and text it to Fyle, which processes it and categorizes it automatically. SparkReceipt also automates receipt scanning and categorization, along with invoices and bank statements.
Use Copilot with Excel
Microsoft’s Copilot has powerful integration with Excel. No matter what data you’re organizing for your tax filing or accounting process, some of it is likely to be run through Excel. Copilot will automate many of the Excel setup tasks that used to take a lot of time and sometimes hard-to-find Excel knowledge.
Chat with a Chatbot for Tax Advice and Guidance
You can also use a chatbot like ChatGPT or Perplexity to get tax guidance and advice. Just keep in mind you want to ask questions about topics that have been written about in prior years, are stable with unchanging tax rules, and for which there is published official guidance.
Upload and Scan Documents for Analysis, Summarization, and Explanation
You can feed your favorite chatbot PDFs for it to analyze and explain. For example, you can upload a copy of the instructions for IRS Form 2553, which is the form used to elect S corporation status. The chatbot can then provide you with a list of important informational nuggets.
What Not to Do
While AI can be a valuable tool in tax preparation, there are certain areas where it’s not suitable. AI should not be used to:
- Provide legally binding tax advice
- Ensure complete tax compliance
- File your tax return on your behalf
- Determine eligibility for complex tax deductions and credits
- Guarantee IRS audit protection
- Handle late tax election relief requests
- Interpret ambiguous tax laws and regulations
- Prepare multi-state or international tax returns
- Detect tax fraud or avoid penalties
- Give investment or retirement tax strategy recommendations
Conclusion
While AI has the potential to revolutionize the way we approach taxes, it’s essential to understand what AI can and cannot do. AI is a tool, not a substitute for human expertise. Always double-check everything, and use AI as a helper, but not as a source of truth.
