Tax preparation is changing fast but AI still has flaws. Here’s where AI tax tools shine, where they fail, and how to use them wisely.
In a recent test of ChatGPT’s Deep Research feature, the AI was asked to identify 20 jobs that OpenAI’s new o3 model was likely to replace. As ZDNET’s Sabrina Ortiz reported, “Right in time with tax return season, leading the table was the role of ‘tax preparer’ with a probability of 98% replacement, which ChatGPT deemed as ‘near-certain automation.'”
There is no doubt that retail tax preparation services are using some level of AI to reduce their workload, but while tax preparers may well be replaced by a machine, I’m not convinced that will lead to accurate or reliable tax returns — certainly not yet.
For example, there may come a time when you’ll be able to tell an AI to find all your receipts and transactions, divide them into categories, identify which categories your deductions are in, and then enter them into the appropriate tax forms and bookkeeping systems. But that series of linked activities does not appear to be available now.
For those who already keep their records in a clear and organized manner, AI might help. But in my first year as a business owner, I kept all — all — my paperwork in a big duffle bag. When tax time came, I just dumped the duffle bag on the desk of my local tax preparer. Turning that disaster into a good tax return was a massive by-hand effort.
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