Full Breakdown
The Risks and Benefits of Using AI for Tax Preparation
3/28/2026, 2:03:21 PM
Growing Adoption of AI in Tax Filing
A significant number of Americans are increasingly utilizing artificial intelligence tools, such as ChatGPT and Claude, to assist in preparing their tax returns. According to a recent poll by Adobe, the percentage of individuals using AI for their 2025 tax filings has surged to 26%, up from 11% the previous year. This trend has been echoed by public figures like Elon Musk, who promoted his Grok AI chatbot as a helpful resource for tax-related inquiries.
Expert Warnings on AI Limitations
Despite the growing reliance on AI, tax experts caution that these technologies can provide outdated or inaccurate guidance, potentially leading to costly errors. Caroline Bruckner, a tax professor at American University's Kogod School of Business, emphasized the complexity of tax law and the risk of AI drawing from outdated government resources, such as IRS.gov. She noted that generative AI could mislead users by summarizing deductions that are no longer applicable due to recent changes, such as those introduced by the Republicans' "One Big Beautiful Bill Act" (OBBBA).
Potential Uses and Pitfalls of AI
While AI can effectively clarify complex tax concepts, experts like Lisa Greene-Lewis from Intuit advise against using general AI tools for filing tax returns. She highlighted the distinction between publicly available AI and specialized tax preparation software, which is trained on extensive datasets and validated by professionals. Mark Gallegos, a tax accountant, echoed this sentiment, stating that current AI models are not yet capable of preparing accurate tax returns.
Concerns Over Data Privacy
Danny Werfel, former IRS commissioner, cautioned users about the risks of sharing sensitive personal information with AI models, which may not be specifically designed for tax-related inquiries. He urged individuals to be vigilant and seek assurances regarding the privacy of their data. Furthermore, Julie Siegel, former deputy chief of staff at the Treasury Department, pointed out that the IRS's elimination of its Direct File tool has led many to turn to AI as a substitute, despite the inherent limitations of these models in understanding individual tax situations.
Misinterpretations and Accountability
The potential for AI to misinterpret authoritative sources, such as IRS forms, poses additional risks. For instance, an AI might incorrectly conclude that no taxes are owed on overtime pay based on misleading headlines. Siegel warned that individuals are ultimately responsible for the accuracy of their tax returns, stating, "If Claude misinterprets an IRS form and gets it wrong, and that causes you to owe a lot of money, you are the one at the end of the day holding the bag."
Conclusion
As the use of AI in tax preparation continues to rise, it is essential for users to approach these tools with caution. While AI can provide valuable insights into tax concepts, the risks of outdated information and misinterpretation underscore the importance of consulting with experienced tax professionals or using specialized software for filing tax returns.
