5 Ways AI Can Help You with Your Taxes (And What Not to Use It For)
In a recent test of ChatGPT’s Deep Research feature, the AI was asked to identify 20 jobs that OpenAI’s new o3 model was likely to replace. As ZDNET’s Sabrina Ortiz reported, "Right in time with tax return season, leading the table was the role of ‘tax preparer’ with a probability of 98% replacement, which ChatGPT deemed as ‘near-certain automation.’"
What AI Can and Can’t Do
While tax preparers may well be replaced by a machine, I’m not convinced that will lead to accurate or reliable tax returns – certainly not yet. There may come a time when you’ll be able to tell an AI to find all your receipts and transactions, divide them into categories, identify which categories your deductions are in, and then enter them into the appropriate tax forms and bookkeeping systems. But that series of linked activities does not appear to be available now.
Using AI Features 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.
Using AI Features in Expense Tracking Software
Not all expense tracking services offer AI features, but Fyle, SparkReceipt, and QuickBooks do. QuickBooks attempts to assign categories using some AI capabilities, but those assignments are almost always incorrect.
Using 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.
Chatting 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.
What Not to Do
I asked ChatGPT to provide me with a list of 10 areas where you should not use AI to help with taxes. It’s a good list, and I fully agree with all of its points.
Conclusion
While AI can be a helpful tool for tax preparation, it’s essential to remember that it’s not a replacement for human expertise. Always double-check everything and use AI as a helper, but not as a source of truth. What do you think? Have you tried AI-powered tax tools like TurboTax Assist, H&R Block Tax Assist, or QuickBooks? Did they help or make things more complicated? Do you trust AI to handle tax prep, or do you still prefer human expertise? Where do you think AI tax tools need the most improvement? Let us know in the comments below.
FAQs
Q: Can AI handle my tax return?
A: AI can help with some aspects of tax prep, but it’s not a replacement for a professional tax advisor.
Q: Can AI ensure I don’t get audited?
A: AI cannot guarantee against audits or provide direct representation if you are audited.
Q: Can AI provide legally binding tax advice?
A: No, AI does not replace professional tax advisors, CPAs, or attorneys.
Q: Can AI accurately handle complex tax deductions and credits?
A: AI may not be able to account for the latest IRS rule changes, state-specific laws, or unique tax situations.
