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Tax time for me is usually pretty straightforward. I get my W-2, enter the information into my tax software, e-file, and I'm done. But, last year was a little different. To raise funds for my upcoming wedding, I sold most of the shares I had bought over the years through my company's employee stock purchase plan. And that meant I might owe capital gains tax. But, instead of asking a tax pro for advice, I tested out an increasingly popular route. More than one in five taxpayers say they're planning on using AI to help file their 2025 taxes. I was a little skeptical about trusting an AI chatbot with my taxes, but any doubts I had fizzled out under ChatGPT's cheerfully helpful demeanor.
And because I was using a paid corporate version of the software that wouldn't use my data to train OpenAI's models, I felt comfortable uploading the consolidated 1099 from my brokerage firm. ChatGPT broke down the information I needed into easy-to-read bullet points and told me that all I had to do was swap one number from my 1099 for another before filing. Easy enough, right? But, just to be on the safe side, I checked with the CPA. Turns out, things weren't so simple. Ask any AI model, can I deduct my dog? And the answer that I would give as a professional is it depends because it covers our butts, right? But, if you ask, can I deduct my dog, it will start off with yes. And I think the challenge that you have
is how many people just stop reading after they get the answer that they want to hear. A number ChatGPT told me was almost certainly right was one I needed to actually calculate and verify, the tax pro told me. Plus, my 1099 had some fishy data ChatGPT hadn't told me about because I didn't think to ask. It's a small enough error to make, but it shows how easy it is to follow AI's advice without doing further research. I literally took a question from my exam not more than a couple of weeks ago, loaded the question in. What I love about those responses is AI will convince you that the sky is green, right? It is so convincing. And it gave me this response that the mechanics were perfect, but I had to take a step back and say, well,
you're wrong. Part of the problem is that large language models may be trained on antiquated tax information. In many instances, the data that goes into a model might be nine or 18 months old, and it could actually be very much older than that. And obviously, tax laws change, right? There is the recent one big beautiful bill act that changed the code pretty significantly. Where is it going to verify that information? Is it going to find an article from 2024, 2025, or 2026? And the difference obviously can sway the results and the accuracy of whatever you're using it for wildly. If you're planning on using an AI for help with your taxes, experts say it's best to use a thinking model rather than
an instant chatbot. Some premium plans from AI firms allow you to toggle between thinking and instant mode, but most free versions of chatbots are not thinking models. You should also be aware of whether an AI firm is using the information you upload to train its software. Even though that information isn't shared publicly, you probably don't want ChatGPT to have access to your social security number. And whether you're using an AI or not, it's probably best to double-check any questions you have with a tax expert. If you make a mistake while using AI to do your taxes, it could get you in trouble with the IRS. And a valid excuse isn't, well, the AI made me do it.
