Can AI Do My Taxes?

Can AI Do My Taxes?

Ever wondered if an AI robot could do your taxes or if you could perhaps convince Siri to crunch those tax numbers for you? It's not as far-fetched as it sounds. We're living in an era where artificial intelligence is making inroads into all aspects of our lives, and tax preparation is no exception. AI can supposedly perform the tedious and repetitive tasks in our lives so we can enjoy other endeavors. So why not have AI do our burdensome taxes for us?

Major tax companies, for example, TurboTax and H&R Block, have capitalized on that very thought. These firms have jumped on the AI bandwagon, introducing chatbots to assist users with their tax preparation. Wouldn't that be wonderful? These AI systems can offer quick and reliable assistance, cutting down on the time you spend poring over paperwork and trying to decipher tax jargon. Just imagine having your own personal tax assistant ready to answer your queries 24x7. It's like having a tax guru at your beck and call minus the guru's hefty fees.

But don't get too excited just yet. As with everything, there's a flip side. These AI systems are still a work in progress. While the concept sounds appealing, the reality is that they're still struggling to provide relevant and correct information. Yes, even AI can have a bad day and spew out garbage. But the question remains: can they really be trusted to do your taxes right?

The Washington Post did an interesting study on the AI chatbots that both TurboTax and H&R Block have added to their tax preparation service. Now let's take a look at these two heavyweights of the tax world and see how their AI systems measure up.

TurboTax, known for their Intuit Assist, and H&R Block with their AI Tax Assist, have both stepped into the ring of AI technology. Both platforms have introduced AI chatbots to help automate tasks like data entry, identify tax breaks, and answer your burning tax questions. It's like having a little tax elf right in your computer, tirelessly working to make tax filing a breeze.

But as with any new technology, these AI systems have their hiccups. TurboTax's Intuit Assist, for instance, has been known to serve up some, let's say, creative nonsense. Imagine asking whether you can get a tax credit for installing a new air conditioner, and TurboTax responded, "Enter your student info, including your 1098-T, at Federal Taxes tab, but you cannot claim a credit if you are claimed as a dependent by someone else." That's bogus! The answer doesn't even follow the logic of the request. The question was about getting a tax credit for a new air conditioner. The response, however, was about student status and being a dependent, completely off track and irrelevant to the question.

H&R Block's AI Tax Assist, on the other hand, has its own set of quirks. When asked which state a college student from California should file taxes in when they are attending college in Arizona, H&R Block responded, "If your daughter will be attending college in Arizona as a freshman, she will need to file a tax return in both California and Arizona." But that's not accurate. The student needs to file only in the state where they actually earned income. This is misdirection and bad advice given by the chatbot. The Washington Post cited many more examples of errors and blunders spouted by the AI chatbots of both companies.

The firms are aware of these issues and are working hard to fine-tune their AI systems. After all, Rome wasn't built in a day, and neither is a perfect AI tax assistant. But it's important for us to remember that these tools are a work in progress. They're like toddlers learning to walk; there will be a few stumbles along the way.

So if the self-help question and answer features of these chatbots are not always reliable, then what are they actually good for, then? Well, let's find out.

1. Accuracy Checks: They can verify if there is missing information on the tax form, whether the right boxes are filled in, or if there are any fat-fingered typos.
2. Summarizing Tax Forms: These chatbots can provide detailed explanations of the finished returns, what taxes you owe, or perhaps what to expect as a refund.
3. Translation Assistance: They can help translate between languages, aiding filers who speak Spanish but are struggling to understand the English instructions needed to complete the forms.

Both TurboTax and H&R Block issue disclaimers that their AI chatbots are not always accurate. The tax filer needs to double-check the accuracy of their forms before filing the returns. Unfortunately, this puts the onus on the tax filer. If the AI chatbot gives wrong advice and the filer follows that erroneous advice, how would the tax filer, who is already stressed out about filing taxes, even know that the chatbot gave bad information?

So while both TurboTax and H&R Block are making strides with their AI tools, it seems they still have a long way to go before they become your personal tax gurus. Both companies claim their AI chatbots are just to answer questions and help folks understand their tax returns but not to calculate taxes.

Now some of you may be thinking, "Instead of using TurboTax or H&R Block, why not just use ChatGPT instead to help do your taxes? After all, it appears to have answers for everything." Well, the collective advice is: don't go there. Here are three big reasons:

1. Outdated Information: ChatGPT doesn't have the latest tax information. Tax legislation is constantly changing every year. However, if you're using ChatGPT 3.5, for example, its knowledge base it's trained on goes only up to January 2022. Each ChatGPT version has different cutoff dates, so you risk using outdated information for your taxes.
2. Privacy Concerns: Never share your personal details with ChatGPT. Whatever personal information you send to ChatGPT, like your address, income, and even your social security number, all becomes part of ChatGPT's knowledge base. Sharable, possibly with the entire world, and you'll be doing the hackers a big favor by handing them your secrets if ChatGPT gets compromised.
3. Math Limitations: Doing math is not ChatGPT's strength. It is trained to give approximate responses based on what it has scraped from the internet, but it's not really trained to do tax-related arithmetic. It can hallucinate answers, and unfortunately, if you accept those as valid numbers on your tax return, the AI's hallucinations may lead you to a real live tax audit by the IRS.

AI chatbots like TurboTax's Intuit Assist or H&R Block's AI Tax Assist are charming with their quick responses and 24x7 availability, but they've been caught red-handed giving inaccurate and misleading answers. They're like that friend who's always ready to help but doesn't really know what they're talking about. So while the future of AI and taxes looks promising, it seems we are not quite ready to hand over our financial life to an AI robot just yet.

So, what's the verdict? Can AI do your taxes? That's the million-dollar question, isn't it?

Let's break it down. AI is certainly making waves in the tax industry with tools being developed to automate data entry, identify tax breaks, and answer questions. Major players like TurboTax and H&R Block are even integrating AI into their services. Yet, it's not all sunshine and rainbows. Current AI tools, while fascinating and cool to use, have their limitations. On occasions, they've given inaccurate and misleading answers to tax-related questions. It's like asking a parrot to do your taxes. Sure, they can repeat the tax codes, but understanding them and utilizing them correctly are a whole different ball game.

The Internal Revenue Service is also using AI presently for improving customer service requests and restoring fairness in auditing. Their goal is to detect tax cheating as well as focus on auditing high earners. But consider this: even the IRS can't get AI to do their taxes completely. So, while the future of AI and taxes looks promising, we're not quite there yet.

So, can AI do your taxes? Not just yet. Your tax accountant can rest assured they'll still have a job and not be replaced by AI for now. Want more continuing updates on these AI-related topics? Please subscribe and support our YouTube channel. It helps us build a community, and feel free to leave comments or suggestions for other AI topics you are interested in. Until next time!

Keywords

• AI
• Taxes
• TurboTax
• H&R Block
• Tax Preparation
• Chatbots
• Intuit Assist
• AI Tax Assist
• Accuracy Checks
• Summarizing Tax Forms
• Translation Assistance
• Privacy Concerns
• Math Limitations
• IRS
• Tax Legislation

FAQ

Q: Can AI systems like TurboTax's Intuit Assist and H&R Block's AI Tax Assist do my taxes completely?
A: Not entirely. While these AI systems can assist with data entry, identifying tax breaks, and answering questions, they have been known to give inaccurate and misleading answers. They are still a work in progress.

Q: Are AI chatbots from tax companies reliable for tax preparation advice?
A: They can be helpful for certain tasks such as accuracy checks, summarizing tax forms, and providing translations. However, they have been caught giving wrong and misleading advice, so users must double-check any information provided.

Q: Should I use ChatGPT for tax preparation?
A: No, it's not recommended. ChatGPT may not have the latest tax information, can compromise your privacy, and is not equipped to handle tax-related arithmetic accurately.

Q: Is the IRS using AI for tax purposes?
A: Yes, the IRS is using AI to improve customer service and restore fairness in auditing by detecting tax fraud and focusing on high earners. However, they are not using AI to do taxes entirely.

Q: Will AI eventually be able to do my taxes completely?
A: Although AI is making progress, it is not yet capable of handling all aspects of tax preparation accurately. It might become reliable in the future, but for now, human oversight is still necessary.