As people with tax filing extensions prepare for the Internal Revenue Service’s October 15 deadline, and others begin to think about their returns due next April, tax prep services are touting AI tools that can help answer questions you have and help you file faster and more accurately. .
H&R Block has, since December 2023, offered people filing through its online products a tool it calls AI Tax Assist, which can answer questions about tax law, particular filing situations, and using the H&R Block software itself through a chat interface similar to ChatGPT. Common subjects include deductions and credits for people with kids, issues around self-employment, and taxes on funds from retirement accounts, says Heather Watts, senior vice president of consumer tax products and support at H&R Block.
“We’ve been working feverishly over the last year to try to continue to expand the amount of content that we have within the model, in order to really help those DIYers be more confident as they’re going through the experience,” Watts says. .
The AI tool only pulls answers from H&R Block’s own tax information sources, so the company can be sure the data going in is accurate. And when there’s a relevant change in tax law, H&R Block’s experts can usually get new information loaded into the AI system within 24 hours. A team at the company also reviews a sample of questions and answers given by the chatbot for accuracy every day, says Watts, with the results feeding back into updates to the technology.
H&R Block isn’t the only tax software maker harnessing artificial intelligence, as the tax prep industry looks to differentiate itself from the IRS Direct File system, which the agency just announced is expanding from 12 to 24 states for next year’s filing season. Intuit’s TurboTax can also answer questions through its Intuit Assist AI in both English and Spanish, and the software can spot potential errors and missing documents and even help quickly match users with an appropriate (human) expert if they want their taxes done for them.
And April, which provides white-label tax filing available through its fintech clients like Gusto, Chime, and Acorns, harnesses AI to let people file quickly, asking people only the questions necessary to complete their returns and answering any questions they may have. Many users are able to file using only their smartphones, and the average user can file after spending about 23 minutes in the software answering about 52 relevant questions, says CEO and cofounder Ben Borodach.
“Every time that we get a piece of information, we recalculate the questions that you need to be asked,” he says. “If you have a W-2 job, you’re going to be asked different questions than if you drive for Uber or if you have a small business.”