Embracing AI in Tax Season: A Personal Journey

Recently, I encountered a surprising twist during tax season—AI came to my aid, identifying a mistake that my human accountant had overlooked. I entered the world of free tax return chatbots, initially expecting their advice to be as outlandish as suggesting I claim my dog as a business expense. However, what I discovered was quite remarkable.

The AI Journey: An Unlikely Ally

It’s not the first time I’ve underestimated the capabilities of AI in my day-to-day life. I once scoffed at a simple meal-planning app powered by AI, only to find myself reliant on it for weekly grocery lists. I used to stare at the empty prompt in ChatGPT, unsure how to leverage its capabilities. Now, that prompt is a constant companion on my screen, where I bounce ideas back and forth, much like chatting with an eager intern.

Despite my skepticism, I’ve found AI to be an invaluable resource, even if I do approach it with caution, double-checking almost every response I receive. It’s true that AI can falter; it often generates hallucinations and delivers inaccurate information. Yet, the time it’s saving me and the ways it’s streamlining my workflow are undeniably beneficial.

How Tax Bots Have Evolved

For the 2023 tax year, TurboTax and H&R Block introduced upgraded AI chatbots designed to assist users in filing their taxes. While Washington Post tech columnist Geoffrey Fowler previously panned these chatbots as “awful” and full of “bad advice,” my experiences this time around tell a different story.

Both companies took the feedback to heart and revamped their chatbots. The new versions appear more restrained, directing users to help documents or human agents when met with complex inquiries. Consider them as your friendly tax coach—there to ease the stress of the filing process according to Heather Watts, H&R Block’s senior vice president. Many users have expressed that these bots instill confidence in the accuracy of their claims and the overall tax refund process.

The Tech Behind the Bots

The TurboTax and H&R Block chatbots utilize proprietary large language models (LLMs), trained on tax codes and internal documentation. While this approach keeps them grounded in reliable information, when I posed specific questions about itemized deductions and the child tax credit, the responses often leaned towards general information rather than precise answers. TurboTax’s AI assistant, for instance, quickly redirected me to help articles or a live agent for complex matters.

Experts suggest that while AI is becoming adept at simpler tax situations, it still struggles with intricate ones. Subodha Kumar, a professor at Temple University, emphasizes that while these bots are evolving, they can still lead to errors if taken at face value, which could result in flagged tax returns or costly mistakes.

The Broader Impact of AI in Accounting

The application of AI isn’t a new phenomenon in the tax world; both TurboTax and H&R Block have long used AI for document analysis and personalized deductions behind the scenes. Many firms are harnessing AI to streamline various aspects of their workflow, saving significant time—up to 20%—by automating routine tasks.

As we look ahead, the emergence of agentic AI could revolutionize how these technologies operate, enabling them to perform entire tasks rather than just offering information. Although we can’t predict when AI will take on the full responsibility of tax filings, companies are paving the way for a more automated future.

However, this advancement isn’t without its critics. Some experts caution against relying too heavily on chatbots, as their responses may sometimes replace rather than supplement the personalized service provided by human experts. Some firms, like Ernst & Young, emphasize a human touch, arguing that interaction with knowledgeable professionals alleviates the stress tax filers can experience.

Conclusion: A Cautious Trust in Technology

Ultimately, AI serves as a supporting tool in my tax filing experience, even catching errors that my accountant missed—the stakes are too high for me to ignore the benefits, despite the potential risks. While I appreciate the strides made in tax-related AI, I also value the human element in the process.

As we continue to navigate these advancements, the question remains about how we can balance technology’s convenience with the assurance of reliable, human guidance.

The AI Buzz Hub team is excited to see where these breakthroughs take us. Want to stay in the loop on all things AI? Subscribe to our newsletter or share this article with your fellow enthusiasts.