“While artificial intelligence promises speed and convenience in handling everyday tasks, leading tax professionals, CPAs, and industry insiders strongly advise against relying on generative AI tools like ChatGPT or similar chatbots for preparing or filing your U.S. tax returns. The risks of inaccuracies, outdated information, privacy breaches, and costly penalties far outweigh any short-term savings, as taxpayers remain fully liable for errors—even if an AI tool caused them.”
The Risks Outweigh the Appeal
Tax season brings a familiar mix of dread and temptation for millions of Americans, especially when free or low-cost options seem readily available. Generative AI tools have exploded in popularity, with many wondering if they can simply input their W-2s, 1099s, and other details into a chatbot and get a completed return. The allure is clear: no fees for basic software, instant responses, and the promise of handling complex calculations without human intervention.
However, seasoned tax experts across the board emphasize that this approach is fraught with danger. Tax law in the United States is notoriously intricate, with frequent updates from Congress, the IRS, and state authorities. Recent years have seen significant changes, including adjustments to standard deductions, expanded credits for families and workers, and new rules around gig economy income, cryptocurrency reporting, and deductions for tips or overtime in certain cases. AI models, particularly public ones, often lag in incorporating these updates because their training data may not reflect the most current regulations.
One major issue is the phenomenon known as “hallucinations,” where AI generates plausible-sounding but entirely incorrect information. For taxes, this can mean misapplying deductions, overlooking eligibility requirements for credits like the Earned Income Tax Credit or Child Tax Credit, or incorrectly calculating self-employment taxes. Even basic arithmetic, which AI has improved on but still struggles with in nuanced contexts, can lead to under- or over-reporting income. Experts note that users without deep tax knowledge may not spot these errors, leading to audits, penalties, interest charges, or amended returns that cost far more than professional help would have.
Privacy and data security represent another critical concern. U.S. tax documents contain highly sensitive information: Social Security numbers, full addresses, bank details, health-related deductions, and investment records. Feeding this into a general-purpose AI chatbot—often without robust encryption or clear data retention policies—exposes it to potential breaches or misuse. Once data is inputted, control is lost forever, as these tools may use inputs for training or store them in ways that aren’t fully transparent. Tax professionals stress that this is especially risky compared to established software from companies like Intuit or H&R Block, which operate under strict compliance standards and bank-level security.
Liability falls squarely on the taxpayer. The IRS holds individuals responsible for the accuracy of their returns, regardless of the tool used. If an AI miscalculates and results in underpayment, penalties can range from 20% for negligence to higher rates for substantial understatements, plus interest accruing daily. There’s no recourse against the AI provider in most cases—unlike with a paid preparer who carries errors and omissions insurance.
Surveys reflect growing caution among filers. Recent polls show a majority of Americans—around 60% or more—do not trust AI to handle their taxes, preferring human professionals or verified software. Younger generations show slightly more openness, but even there, willingness has declined as awareness of risks spreads. Tax preparation companies themselves, after rigorous testing of leading AI models, have concluded that the technology isn’t reliable enough for full preparation, opting instead for hybrid approaches where AI assists under heavy human oversight.
When Might AI Have a Limited Role?
AI isn’t entirely useless in the tax process. It can serve as a supplementary tool for basic tasks, such as explaining IRS terminology, summarizing form instructions, or brainstorming general deduction categories. For instance, asking for an overview of Schedule C requirements or clarifying what qualifies as a home office deduction can provide a starting point. Some professionals use specialized, proprietary AI within secure environments to streamline data entry or flag inconsistencies, but these are vetted and integrated with human review.
Even here, verification is essential. Cross-check any AI output against official IRS publications, recent bulletins, or a trusted advisor. Public chatbots often include disclaimers urging users not to rely on them for financial decisions, precisely because of these limitations.
Better Alternatives for Accurate Filing
For most Americans, established options remain superior. Free File programs through the IRS partner with software providers for those meeting income thresholds. Commercial software guides users step-by-step, flags potential issues, and offers audit support. For complex situations—business ownership, rental properties, investments, multi-state filings, or life changes like marriage, divorce, or inheritance—enlisting a CPA, enrolled agent, or credentialed preparer provides expertise and accountability.
In high-stakes financial matters like taxes, where errors compound quickly, the consensus from experts with decades of experience is unequivocal: stick to proven methods. The convenience of AI doesn’t justify the potential financial and legal headaches.
Disclaimer This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex and subject to change; always consult a qualified professional or official IRS resources for your specific situation.
