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.'”

There is no doubt that retail tax preparation services are using some level of AI to reduce their workload, but 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.

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For example, 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.

For those who already keep their records in a clear and organized manner, AI might help. But in my first year as a business owner, I kept all — all — my paperwork in a big duffle bag. When tax time came, I just dumped the duffle bag on the desk of my local tax preparer. Turning that disaster into a good tax return was a massive by-hand effort.

My business made very little that first year, but the fee I had to pay that preparer to excavate my documents and prepare my taxes was breathtaking. After learning my lesson, I got more rigorous about organizing my records. My point is that young entrepreneur me is not the only person with sloppy documentation. Some jobs will always require a human for at least some of the work.

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Even with good organization and rigorous bookkeeping (which I’ve done religiously for a few decades now), the various tools that we need to work together are usually from different vendors. The AIs are just not up to that level of organization across a wide range of documents and activities.

That said, there are areas where an AI can help. Here are five of them.

1. 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 its TurboTax product. TurboTax can import data from 350 financial institutions and can auto-fill tax form fields using a tool called IntuitAssist. The AI is also used to check forms for accuracy and find errors, recommend deductions, and answer tax questions.

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Intuit is also pitching a TurboTax Live Assisted program where an AI will match you with a tax expert who will work with you in a Zoom-like call to fill out your taxes. This is sort of a mix of artificial and real intelligence.

H&R Block Tax Assist is a new generative AI tool that can provide tax information, help with tax preparation, and answer free-form tax-related questions to help you understand the tax issues you’re dealing with as you complete your returns.

H&R Block also says its Tax Assistant can answer questions about recent changes to tax code, but be careful because AI knowledge tends to lag a bit behind real-time regulation changes.

Now, all of this might sound good, but keep in mind that generative AI has the tendency to make mistakes, make stuff up, and mislead. That’s not exactly what you want when preparing taxes. Geoffrey A. Fowler of the Washington Post provides a cautionary tale. He tried both TurboTax and H&R Block’s AI features and found them to be “awful.”

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To be fair, I’ve paid real-world human accountants for tax prep help, and have found some of them to be awful, too. Taxes aren’t fun, and you have to double-check everything, whether it’s your own work, the work of an AI, or the work of someone who claims to be an expert.

2. Use AI features in expense tracking software

Not all expense tracking services offer AI features, but Fyle, SparkReceipt, and QuickBooks do.

I am a somewhat involuntary QuickBooks user. The price has gone up considerably over the years, but the switching costs are even higher. So I stick with QuickBooks. For imported expenses that don’t have custom rules, QuickBooks attempts to assign categories using some AI capabilities. Don’t count on this feature. Those assignments are almost always incorrect.

QuickBooks also constantly pushes its related services, some of which have AI capabilities. But I haven’t found anything on offer that seems worth the upsell, so I haven’t tapped into those additional AI capabilities.

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Fyle‘s big claim to fame is what it calls Conversational AI for Expense Tracking. Basically, all you do is snap a picture of your receipts with your phone and text it to Fyle. Fyle processes it in and categorizes it all automatically, saving a lot of time.

SparkReceipt also automates receipt scanning and categorization, along with invoices and bank statements. It will then enter your information, without the need for manual entry. The key feature here is the categorization of expenses, which can often take both time and effort to do by hand.

3. 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.

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Rather than go into more details here, I recommend you watch this video from Singapore, where the instructor provides a detailed look at how Excel works with taxes. While tax policy in each country is different, the tasks the instructor performs are very similar throughout the world.

4. 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.

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Here are some examples I tried. They all resulted in good and accurate answers (at least as best as this non-accountant could tell).

• Who needs to file a US federal tax return?
• What are the IRS standard deduction amounts?
• What are the tax brackets for past years?
• What is the difference between a tax deduction and a tax credit?
• What are common itemized deductions?
• What tax credits are available for education expenses?
• How are Social Security benefits taxed?
• How can I check the status of my federal tax refund?
• What triggers an IRS audit?
• How long should I keep my tax records?

Make sure you preface any questions you ask with your filing jurisdiction. If you’re in the US, say so. If you’re in Singapore, tell the AI that. Otherwise, the AI will probably not know which jurisdiction’s tax rules are appropriate for you.

5. Upload and scan documents for analysis, summarization, and explanation

You can feed your favorite chatbot PDFs for it to analyze and explain. For example, I uploaded a copy of the instructions for IRS Form 2553, which is the form used to elect S corporation status.

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I asked ChatGPT, “Explain this.” I then asked it, “What are the most important things I should know?” It scanned the document and provided me with a list of important informational nuggets.

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.

1. Providing legally binding tax advice: AI does not replace professional tax advisors, CPAs, or attorneys.
2. Ensuring complete tax compliance: AI may not account for the latest IRS rule changes, state-specific laws, or unique tax situations.
3. Filing your tax return on your behalf: AI cannot submit tax forms directly to the IRS or state tax agencies.
4. Determining eligibility for complex tax deductions and credits: Some deductions and credits (like the Qualified Business Income Deduction) require professional assessment.
5. Guaranteeing IRS audit protection: AI cannot ensure you won’t be audited or provide direct representation if you are audited.
6. Handling late tax election relief requests: The IRS may require a written explanation of “reasonable cause,” which is best handled by a tax professional.
7. Interpreting ambiguous tax laws and regulations: AI cannot provide definitive answers on gray areas of tax law or IRS rulings.
8. Preparing multi-state or international tax returns: AI may not accurately handle tax liabilities across multiple jurisdictions.
9. Detecting tax fraud or avoiding penalties: AI cannot verify whether deductions, credits, or income reporting comply fully with IRS standards.
10. Giving investment or retirement tax strategy recommendations: AI cannot advise on tax-efficient investment decisions, Roth IRA conversions, or estate planning strategies.

I’ll add one more: Do not ever trust the AI to be right. Always double-check everything. Use the AI as a helper, but do not rely on it 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.

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