Tax Shop
Tax Shop
Charles Trautman, EA · Since 1969

10 Concerns About AI Tax Prep

AI says it’s free.

AI says it’s instant.

AI doesn’t say who answers the IRS letters.

We can help you answer the letters.

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Artificial intelligence is a useful tool, and it’s getting better. But preparing an income tax return is more than filling in boxes. It takes the right questions, current law, your history, and someone who signs the return and stands behind it. Here are ten reasons to think twice before you let AI prepare yours.

Prefer the short version? Our one-minute film is at the bottom of this page.

On this page

  1. You’re responsible for every number, not the AI Who is liable for mistakes
  2. No one signs it, and no one stands behind it Paid preparer responsibility
  3. It only knows what you tell it Missing income and forms
  4. It doesn’t ask the questions that matter The interview
  5. Confident is not the same as correct AI “hallucinations”
  6. Tax law changes, and AI may be working from last year Recent law changes
  7. Your Social Security number goes into a chatbot Privacy and confidentiality
  8. Mistakes surface years later, with penalties and interest IRS assessment periods
  9. When the IRS writes, AI can’t represent you IRS representation
  10. It doesn’t know your history or your state Carryovers, basis and Colorado

1. You’re responsible for every number, not the AI

The IRS holds the taxpayer responsible for an accurate return, no matter who or what prepared it. If an AI tool gets it wrong, the tax, the penalty and the interest are yours. AI tools carry no liability for their answers, and their own terms generally tell you to check the output yourself.

It’s free right up until it isn’t. Then it’s your bill.

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2. No one signs it, and no one stands behind it

A paid preparer signs your return, uses an IRS-issued preparer number, and answers to the IRS for the work. An Enrolled Agent is licensed by the IRS and held to its standards of practice. An AI signs nothing and answers to no one.

If no one is willing to sign it, ask yourself why you’re willing to.

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3. It only knows what you tell it

AI works only from what you hand it. It won’t notice the 1099 that never arrived, the brokerage account you forgot, the cryptocurrency sale, or the side income that never got a form. The IRS gets copies of most of those forms and matches them to your return.

The IRS already knows what you forgot. The AI doesn’t.

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4. It doesn’t ask the questions that matter

Good tax preparation starts with questions. Did you move, marry, divorce, sell a home, change jobs, start a business, help support a parent? Those answers are where the deductions are, and where the mistakes are. A chatbot answers questions. It doesn’t ask the right ones.

Nobody ever saved money on taxes by being asked fewer questions.

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5. Confident is not the same as correct

AI can produce answers that sound authoritative and are simply wrong, including rules that don’t exist and numbers that don’t add up. It delivers a wrong answer in the same calm voice as a right one, so you can’t tell from the answer itself.

It never says “I’m not sure.” That should worry you.

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6. Tax law changes, and AI may be working from last year

The tax rules for 2025 and later changed in important ways, including new deductions for tip and overtime income and for seniors, and a higher cap on the state and local tax deduction. An AI working from older material can apply the old rules with complete confidence.

Congress rewrote the rules. Not every chatbot got the memo.

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7. Your Social Security number goes into a chatbot

Uploading your W-2s means handing your name, Social Security number, income and employer to a service whose data practices you probably haven’t read. Tax preparers are bound by federal law (Internal Revenue Code section 7216) on how they use and share your return information. A general AI service is governed by its own terms.

Your tax return is the most complete picture of your life on paper. Be careful who you show it to.

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8. Mistakes surface years later, with penalties and interest

The IRS generally has three years to assess more tax, and six years if income was substantially understated. A mistake can come back long after you’ve forgotten the return, often with a 20% accuracy-related penalty plus interest from the original due date.

The return was done in seconds. The letter takes two years to arrive.

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9. When the IRS writes, AI can’t represent you

An Enrolled Agent can represent you before the IRS in audits, collections and appeals, and can speak with the IRS on your behalf. A chatbot can help you draft a letter. After that, you’re on your own.

The AI won’t be on the phone with the IRS. We will.

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10. It doesn’t know your history or your state

Capital loss carryovers, depreciation on a rental, the cost basis of inherited stock, and credits carried from prior years all depend on records from earlier returns. Colorado adds its own additions, subtractions and credits. AI sees one year in isolation, and next year it starts over from scratch.

We remember last year. And we’ll be here next year.

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What to do about it

Use AI to learn, to organize your questions, or to understand a term. When it’s time to prepare and sign the return, have a person do it, and keep the same person next year.

Call 303-734-1040 or stop by the office in Lone Tree. If AI already prepared a return for you and something doesn’t look right, or a letter has arrived, we can review it and fix it.

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General information, not advice for your specific situation. Last updated October 2026.