Can AI Tools Help You File Taxes Or Will It End Up Being Taxing?

The last year has been big for Artificial Intelligence (AI), especially for generative AI. The competition to come up with use cases has become quite fierce between tech conglomerates and startups engaged in this sector. So far, generative AI has been used to create images, sounds, lyrics, stories, etc. and answer all sorts of questions. According to experts, this technology could possess multifaceted usage across many industries.

The most popular generative AI tool at the moment is OpenAI’s ChatGPT. The tool was released in November 2022 and managed to garner more than a million followers in less than 5 days and 100+ million active users in 2 months.

Recently an experiment was carried out using ChatGPT to determine its usefulness in filing tax returns and computing deductions. According to a report by USA Today (read here), when the person experimenting with the tool asked it what “creative, out-of-the-box deductions” could be claimed for the 2022 taxes, it mentioned charitable expenses, retirement account contributions, job-related expenses and then suggested consulting a tax professional. Reportedly, these answers are similar to those found by a Google search or other AI models.

According to the report, every answer ended with: “It's important to note that tax laws and regulations can be complex, and deductions may vary based on the specific circumstances of your situation. If you have questions about deducting expenses on your tax return, it's recommended that you consult with a tax professional or use up-to-date tax software to ensure that you are following the rules and taking advantage of all available tax deductions.”

Essentially, AI is not of much use in this case as it doesn’t have much personal information.


However, this situation is different when using AI along with a tax expert.

At present, there are quite a few online tax tools that make use of AI already. Reportedly, TurboTax Live, a tax return assisting software, makes use of AI to instantaneously (reported as 500 milliseconds during peak traffic) match a taxpayer with an expert. Additionally, it can collect information from over 24,000 institutions to manage relevant data. Along with this, the tools can flag complex returns to be reviewed by a human expert.

Speaking on the same, CPA Neil Balanay, a “live expert” with TurboTax and over 24 years of experience in tax filing, said, “It’s amazing, to tell you the truth, [it] helps us pinpoint what’s important, troubleshoot, and the whole process is much faster.” He added, “I’ve learned how to be a better listener. We want to make this whole process stress-free.”


He also spoke about overlooked expenses and unique claimable deductions. These could include state sales tax, jury pay paid to an employer, moving expenses, pet moving expenses, student loan interest and under particular circumstances, summer camps, side gigs, service animals, whaling ships and swimming pools. Although, he also mentioned that people should consult with their accountants or tax professionals to ensure they’re doing things right.

Essentially, the consensus was that a mix of AI, dedicated software and human intervention allows people to file their tax returns and claim surprising deductions!

What do you think of using AI, dedicated software and human experts for filing tax returns? Do you think generative AI tools solely will be sufficient for this purpose ever? Let us know in the comments below!