The rise of artificial intelligence (AI) has triggered concerns across various sectors, particularly among employees fearing for their job security. This apprehension coincides with the season when many individuals face the annual task of filing taxes. Financial experts are noting a surge in anxiety during tax season, particularly among those who may feel unprepared.
Jenny Groberg, CEO and founder of BookSmarts Accounting, a firm focused on women’s financial needs, explains that many of her clients intentionally avoid tax preparation out of fear and uncertainty. “I see a lot of my clients who aren’t prepared for taxes because they’re avoiding it,” she says, highlighting the stress associated with not knowing how much one will owe.
Amid this backdrop, Groberg acknowledges the increasing likelihood that people will turn to AI tools for assistance with their taxes. Although she points out that chatbots cannot perform tasks like signing and submitting tax documents, they can help with several preliminary processes. Groberg warns, however, that depending solely on AI could lead to potentially serious repercussions.
She offers a nuanced view on how AI can be a helpful assistant in the tax filing process. AI’s capabilities include simplifying complex tax terms, organizing essential documents, and helping taxpayers prepare informed questions for their Certified Public Accountant (CPA). “I’d much rather have an organized chart that AI helped them create than a pile of receipts,” Groberg remarks, emphasizing the efficiency AI can bring to tax preparation.
She outlines three primary benefits of employing AI in this context:
- Simplicity: AI can clarify basic tax concepts, deadlines, and common deductions.
- Organization: It can aid in creating checklists, gathering required documents, and formulating questions for a CPA.
- Scenario Planning: AI can stimulate thinking around various tax implications, such as starting a side business or purchasing a home.
Groberg believes that utilizing AI can alleviate some stress for taxpayers, providing organization and clarity amidst the chaos of tax season. However, she warns against inputting sensitive personal information into AI platforms. Companies like TurboTax and H&R Block have integrated AI features that assist users with answering questions, identifying deductions, and importing documents. The technology can even scan photos of important documents, but Groberg cautions against this practice due to security worries.
There are substantial risks associated with relying on AI for tax filing, Groberg explains. These include:
- AI Confident Guesses: Tax law is intricate, filled with exceptions and state-specific rules that AI might mishandle.
- No Accountability: If AI produces errors, taxpayers rather than the AI bear the financial repercussions, including penalties from the IRS.
- High-Risk Blind Spots: Areas such as tips, freelance income, and specific business deductions present high chances for AI mistakes.
Recently, the IRS issued guidance regarding AI use in tax filing, clarifying that individuals are liable for any inaccuracies. While Groberg acknowledges the potential of AI as a useful tool, she urges taxpayers to remain educated about both its benefits and pitfalls.
She advises that individuals should engage reputable tax preparers who are knowledgeable about current laws and regulations. While using AI can be advantageous for generating questions or identifying local preparers, Groberg strongly recommends against allowing it to handle the entire tax process. “I just wouldn’t use AI to the finish line,” she concludes, reinforcing the importance of human expertise in navigating complex financial obligations.
