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AI and Tax Filing: Navigating the Promise and Pitfalls

In this post:

  • Experts caution using AI chatbots for tax advice; emphasize professional guidance.
  • AI in tax filing shows promise but faces accuracy and security challenges.
  • Despite AI’s rise, verifying tax info with professionals or the IRS is vital.

Along with the open season on taxes, the temptation to employ artificial intelligence (AI) chatbots for filing tax returns and for tax advice will increasingly appear deep to many. Entrepreneur taxpayers tend to pay attention to the novelty, like ChatGPT, that is taking the spotlight of those who need some guidance. Despite this, financial experts argue that caution warrants the concerns outlined on the restrictions and probable pitfalls to put reliance on the Deep Mind for tax tasks into question.

Expert advice: AI use AI with caution notwithstanding, we should employ AI with caution

AI is being utilized more and more in tax preparation and a notable amount of Americans are pretty hesitant to or already currently utilizing AI for their tax filings. A hair-raising statistic by CardRates shows that almost 18% of Americans would trust AI Chatbots like ChatGPT in filling out their taxes. Another poll done by the Harris Poll supported these sentiments where 17% and 45% of people had already and potentially used AI for their tax filing respectively.

Crafting a reality filled with hope when science fiction deals mostly with loss and emotions of guilt or despair emerged as my first and foremost aim in my project. The instability of tax systems and the individual character of tax filing is such that AI will find it difficult to serve as an accurate and specific advisor. It is in line with a warning from OpenAI, the makers of ChatGPT, who advise against entrusting the chatbot with decisions related to money while stressing the indispensability of communication with tax experts.

With the rise of the AI chatbots, those of TurboTax, H&R Block, and the IRS too, are more available and convenient. These instruments intend to light the tax filing process to some extent, provide basic guidance, and feed the demands of the market. Examples include TurboTax’s Intuit Assist AI tool and H&R Block AI Tax Assist which have been designed to facilitate do-it-yourself tax filing. Now, AI technology is able to complete some of the tasks of filing tax forms, but it still faces a question mark over its capability to handle some subtleties.

Subodha Kumar, a professor at Temple University’s Fox School of Business, points out the limitations of AI chatbots in providing accurate tax advice. Through testing with students, Kumar observed that while AI can handle general tax inquiries, it often falters with more detailed questions. The generality of AI training and the lag in data updates are identified as significant hurdles, especially considering the ever-evolving nature of tax legislation and regulations.

Security concerns and future outlook

Data security emerges as another concern when using AI for tax purposes. Inputting sensitive financial information into AI systems raises the risk of data leakage. Experts like Spencer Lourens from CliftonLarsonAllen highlight the potential for data security breaches, advising against sharing personal tax details with AI chatbots. Instead, they suggest using AI for gaining general knowledge, complemented by verification from reliable sources such as the IRS website or professional tax advisors.

Despite current limitations, there’s optimism for the future of AI in tax filing. With advancements and more targeted training, AI could soon offer more accurate and reliable tax assistance. The potential for AI to become a valuable educational tool in understanding tax concepts, without compromising personal information, is also recognized.

As AI continues to integrate into various aspects of personal finance, its role in tax filing is evolving. While the technology offers convenience and potential for simplified tax processes, the need for professional advice and security considerations remains paramount. Taxpayers should approach AI with caution, acknowledging its current limitations and prioritizing accuracy and security in their tax filing endeavors.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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