Excuses that DON’T count for failing to file and pay your taxes:
- My dog ate my documentation.
- I wasn’t feeling well…every day of tax season.
- I thought the deadlines were null because of the IRS layoffs and budget cuts.
So far, even with the layoffs and budget cuts, tax matters are still going according to schedule. Which means you have no excuse for not sticking with that schedule.
And no matter what talk is happening right now about eliminating the IRS (to be clear, this is just a proposal right now) – you need to file your taxes this year.
Avoiding paying your taxes and filing your return because you’re hoping the IRS might dissipate in time is NOT a smart strategy. Tax collectors are still collecting, and failure to file/pay comes with significant costs (as I discussed at greater length last week).
Don’t let your financial wellbeing get hijacked by what-if scenarios, my Milwaukee friend. Practice good tax strategy, and let the IRS chips fall where they may.
Because the likely direction the IRS is heading, at the direction of Congress, is actually toward being more efficient and transparent. This is happening through two key proposals:
- The Electronic Filing and Payment Fairness Act: To help you file on time and to make sure all payments are consistently protected.
- The IRS Math and Taxpayer Help Act. If math isn’t your forte, the IRS will help break it down for you. The proposal requires the IRS to explain math-related errors on your tax filing and gives you 60 days to challenge them on it.
And the effort toward more efficient taxes isn’t just happening on the government’s part – tax software companies like TurboTax and H&R Block are getting in on the trend by introducing AI-powered tax filing assistants.
Sounds great, right? You just give the bot your documents, and it takes care of the rest. But the problem is, in most cases, AI actually can’t take care of the rest (at least, not adequately). And if you trust it to do so, you may end up sorely disappointed and financially worse off.
When Milwaukee Taxpayers Should NOT Use AI For Taxes
“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” – Charles Darwin
Well, AI has invaded the realm of tax filing. It was only a matter of time, I suppose. Companies like TurboTax, H&R Block, and QuickBooks have their own AI-powered assistants designed to help you file your taxes.
AI isn’t a bad helper with taxes, per se. But don’t make it your sole tax preparer. When AI tools take the lead in the return preparation process, things can become inefficient at best and dangerous at worst.
I’m not saying this here simply to be the bad cop. But as the tax pro in your corner, I aim to help you make informed decisions on all things tax-related and to shield you from any potential threats.
It’s a role I don’t take lightly – which is why I want to take the time to point out a few specific ways using AI for your taxes could cost you.
1. Using AI for taxes: you can be led astray.
Tax laws change… ALL. THE. TIME. And AI tax assistant software updates don’t always incorporate the latest IRS rulings or temporary provisions right away. Which means you’ll likely end up needing to file an amended return.
AI assistants tend to focus primarily on federal-level tax regulations, leaving you fuzzy on your state-specific requirements.
But don’t just take my word for it.
As a real-world example, both TurboTax’s and H&R Block’s AI assistants steered Washington Post columnist Geoffrey A. Fowler wrong when he asked how his daughter, who was attending college out of state, should file taxes. Both assistants spewed irrelevant advice because they couldn’t comprehend the nuances of inter-state filing rules.
2. Using AI for taxes: you’ll miss out on credits and deductions.
The problem lies herein — AI assistants use highly generic questionnaires to get to know you. They can’t ask questions that are targeted enough to fully understand the nuances of your situation.
The outcome? You’ll likely miss out on credits that a human tax pro would have thought to uncover for you.
Where AI tools can go awry…
– Misinterpreting the documentation you give them for claiming deductions
– Failing to clarify differences between two similar credits with highly nuanced rules
– Not knowing how to advise you on which credit or deduction would give you the biggest benefit
AI’s approach is often generalized and surface-level with credits and deductions. But your taxes are usually complex and nuanced. And your credit/deduction approach should account for your unique situation and needs.
3. Using AI for taxes: you don’t get IRS protection.
If you use AI for taxes, you do so at your own risk. AI assistants could potentially increase your possibility of an audit with missteps and wrong guidance… AND they won’t be able to help you should that happen.
In the same case I mentioned earlier, the AI assistant confidently recommended an incorrect filing status to Fowler – a sure way to bring the IRS knocking on your door.
Besides being flat-out wrong at times, AI assistants also aren’t good at spotting audit triggers on your return. For example: A really common audit flag is claiming huge charitable deductions relative to your income. AI assistants will simply prompt you to enter your donation amount and send you on your merry way, failing to warn you about this.
Misclassification of income and expenses, submitting the wrong documents for claiming a credit or deduction, and mishandling side gig income are all mistakes in this same vein. These are easy to make and have costly consequences … all without AI cautioning you against them.
Then, if you DO end up getting audited, the AI assistant won’t be there to help represent or guide you. This is where, when you use a trusted, HUMAN tax professional, you’ll get guidance on your options and help to find the best way to a resolution with the IRS.
The role of an AI assistant in your taxes is just that: To assist you. Not to run the show. If you want to stay fully compliant, get the most credits and deductions you can, and stay safe from IRS trouble, you need a human tax professional on your side. I’m happy to be that human.
Now that we’re in March, there’s a little more than 5 weeks to get your return prepared and submitted. Let’s get your taxes filed:
414-325-2040
The Southeastern Wisconsin human in your corner,
Jon Neal