The Future of Tax Filing with AI

Tax season often brings anxiety and paperwork, but artificial intelligence (AI) is changing that. As technology advances, AI is transforming how taxpayers file returns, identify deductions, avoid audits, and ensure compliance. Here’s how tax filing will evolve over the next few years with AI.

Key IRC Sections and IRS Forms

• IRC §6601 – Filing requirements and due dates
• IRC §6101 – Accuracy-related penalties
• IRC §6501 – Recordkeeping obligations
• Form 1040 – Individual Income Tax Return
• Form W-2/1099 – Income Reporting
• Form 8867 – Paid Preparer Due Diligence Checklist

What is AI Doing in Tax Filing?

• Automating Data Entry: AI auto-extracts numbers from W-2s, 1099s, receipts, and bank statements.
• Finding Deductions: Identifies missed deductions (home office, medical expenses, education credits).
• Chatbots for Help: AI-driven assistants guide taxpayers in plain language.
• Fraud Detection: Flags anomalies in returns before IRS audits do.
• Filing Optimization: AI compares filing statuses and simulations to reduce tax bills.

Real-World Example

Lisa, a freelance content creator, used an AI-based tax app. It scanned her invoices, categorized business expenses, and optimized deductions like the QBI deduction under IRC §199A. The AI also warned her that she hadn’t reported a 1099-K, which she then corrected. She avoided a potential audit and saved $3,200 in taxes.

Advantages of AI in Tax Filing

• Speed: Files in minutes, not hours
• Accuracy: Reduces manual errors and missed entries
• Compliance: Ensures real-time updates with new tax laws
• Cost Savings: Reduces the need for expensive preparers (though oversight is still needed)
• Scenario Planning: Compares tax liability based on various decisions (e.g., IRA contribution vs. SEP IRA)

Step-by-Step: Filing with AI Tools

1. Choose an AI Tax Platform: Ensure it integrates with IRS forms and supports your tax profile.
2. Upload Documents: Scan/upload W-2, 1099s, bank statements.
3. Verify Deductions: Let AI suggest, then confirm based on actual records.
4. Run Audit Check: Use built-in tools that simulate audit risk scores.
5. Submit or Export: Either e-file directly or send to your CPA for review.
6. Retain Copies: Save a copy of the AI’s calculation and audit logs.

Conclusion

AI is not replacing tax professionals but making them more efficient. By combining AI’s speed and analysis with a CPA’s judgment, taxpayers can achieve greater compliance and savings. The future of tax filing is faster, smarter, and more transparent.

Call to Action

Ready to streamline your tax filing?

Anshul Goyal, CPA EA FCA is a licensed U.S. Certified Public Accountant, IRS-authorized Enrolled Agent, and a leader in AI-powered tax strategy and compliance for individuals and businesses.

Disclaimer

This blog is intended for educational purposes only and should not be considered legal or tax advice. Please consult a professional before implementing AI tax strategies.

Top 5 FAQs

1. Can AI completely replace CPAs?
   No. AI assists but doesn’t replace the strategic role and representation power of a CPA.
2. Are AI tax apps secure?
   Yes, reputable platforms use encryption and follow strict data privacy protocols.
3. Will AI help reduce audits?
   Yes, by flagging inconsistencies before filing, AI reduces the chances of audits.
4. Is AI useful for business tax filings?
   Yes. It helps with expense categorization, depreciation, payroll reconciliation, and more.
5. What if AI makes a mistake?
   That’s why oversight by a CPA is crucial. AI is a tool, not a final authority.

About Our CPA

Anshul Goyal, CPA EA FCA, is a U.S. Certified Public Accountant and IRS-authorized Enrolled Agent. He represents clients in audits, complex filings, cross-border tax planning, and AI-powered tax compliance.