How has artificial intelligence been utilized in the tax system so far?

If you’ve ever used a tax filing website that took your information from last year and used it to start filling out this year’s forms, then you’ve already used AI in your taxes! Many online platforms can pull out relevant personal and job data from previous tax forms to make it easier to get started on a new one. AI has also taken on more customer support roles recently, powering chatbots and virtual assistants to answer specific questions as they appear.

On the other side of the tax process, the IRS has also found new ways to utilize AI. Artificial intelligence and machine learning are used to process the huge number of documents that the IRS receives every year, identify patterns or flags that might indicate the need for an audit, and speed up the time it takes to accept a return and send out a refund. The IRS has historically been behind the times when it comes to incorporating technology, and the increased use of AI tools is accelerating its push for more modern and streamlined processes.

How can AI impact tax literacy?

With AI tools becoming more widespread and accessible, there are plenty of ways to use them to improve tax literacy. Asking a reliable AI chatbot specific questions about filing taxes can provide tax education that’s both easy to understand and personalized to specific situations. Additionally, many AI tools are available 24/7 without having to pay a fee, enabling people to ask questions as they think of them. Access to specialized AI tools to help with taxes can help people build confidence and curiosity, and it can be extremely valuable in building tax literacy.

That said, AI is best utilized as a learning tool alongside others regarding taxes, and overly relying on it can hurt your tax literacy. If you just plug your AI forms into a website and let it do the work for you, you can go through the entire tax process without understanding what’s happening. Though that’s convenient, it also means that you’re not building your knowledge of why you pay taxes or get a refund—and if the program you use makes a mistake, you’re less likely to catch it and more likely to have to deal with an audit or penalty.

As with all technological solutions, utilizing AI in the tax process should also consider accessibility. Though an AI virtual assistant to answer tax questions is a huge help for many people, it isn’t all that useful to people without reliable internet access or elderly people with less technological confidence. As helpful as AI can be in tax processes, it works best when used alongside experts who can support people in their specific situations.

What should I keep in mind about using AI tools when filing my taxes?

Though AI can be a huge help in understanding and filing taxes, make sure to remember that it’s a tool to support your work. It can still make data processing and output mistakes, and it might struggle more if you have a complex financial situation requiring many different tax forms. Regardless of what tools you use when filing taxes, you’re still responsible for making sure the information is correct when you submit it and having a strong tax literacy of your own means that you’ll be able to double-check your forms confidently.

Bruckner says: "This is part of what we teach students at KSB in how to use AI effectively and to trust but verify any AI-generated response. AI is not yet at the point where it can generate an accurate tax return. Critical thinking and research are still needed."

It's important to remember that while AI tools can help with your taxes and even support you learning more about them, it’s not a replacement for your own tax literacy. By making sure you understand the forms you submit instead of relying solely on a program to do it for you, you can set yourself up for success.