Last tax season, a user on X posted that an AI chatbot had helped them boost their refund by $1,400. Elon Musk shared it with a one-line endorsement: Grok, he said, can help with your taxes. The post went viral. About 26% of Americans are now using AI to file their 2025 returns — nearly double the prior year’s rate, according to Adobe polling. A growing number are asking chatbots directly about deductions, filing strategies, and what they owe. But the uncomfortable question is: should you?
The Appeal — and the Appeal’s Limits
The logic is straightforward. For decades, professional tax help has been expensive and intimidating. Now general chatbots offer free, instant answers to questions that used to require a CPA or hours scrolling through IRS.gov. “You can ask it a question without providing any identifying information,” said Caroline Bruckner, a tax professor at American University’s Kogod School of Business. “It can be great at translating a complicated tax concept into English.” Ask an AI to explain what the “no tax on tips” deduction means, and it’ll break it down in seconds.
But NerdWallet’s data studies team recently stress-tested three major chatbots with over 50,000 words of tax transcripts modeled after IRS enrolled-agent exams. For factual questions, the bots nearly aced the test. But when queries got personal and open-ended — the kind real tax situations involve — accuracy fell apart. One chatbot claimed an electric vehicle credit was still available for a new Tesla (it isn’t). Another gave a standard deduction figure off by nearly $3,000. A third said overtime pay was fully deductible when, in fact, it isn’t. The errors weren’t edge cases — they were confident, smooth, and completely wrong.
“Taxes involve both math and law,” said Sam Taube, lead writer for NerdWallet’s investing and taxes team. “Even though AI has gotten better at the former, and may get better at the latter in the future, it’s not a reliable source of truth yet.”
Why the Code Outpaces the Chatbot
The deeper problem is timing. U.S. tax law shifts constantly — sometimes mid-year through legislative changes like the recent “one big beautiful bill act.” Even IRS.gov holds archived information from prior years that hasn’t been updated, and large language models routinely pull from it as if it were current. “Our tax law is so incredibly complex, and the website has to have information that was true in 2020 as well as 2025,” Bruckner told CBS News. “That’s where generative AI can really cause problems.”
A study in Today’s CPA found that Copilot, Perplexity, and a specialized TaxGPT tool all provided conflicting — sometimes dangerously wrong — guidance on tax basis calculations and education credits. In some cases, Copilot’s data was only current through 2021, making it years out of date.
Privacy: The Risk Nobody Mentions
Danny Werfel, former IRS commissioner (2023–2025), has a blunt warning: never feed sensitive personal information into a general-purpose chatbot. “You should be very wary of using AI and seek assurances that your information won’t be harvested or shared for commercial purposes,” he told CBS News. OpenAI’s own privacy policy acknowledges that user data may be used to train future models. For a taxpayer, that means sensitive information entered into a public chatbot could theoretically surface in unrelated conversations. Professional preparers are bound by AICPA standards and IRS Circular 230 to protect client data — the wrong use of AI can inadvertently violate both.
Built-In AI vs. General AI: Not All Chatbots Are Equal
Major tax prep companies haven’t ignored this wave — they’ve tried to harness it. H&R Block’s AI Tax Assist and TurboTax’s Intuit Assist are built on the premise that AI is useful if it’s trained on tax-specific data and kept current. Lisa Greene-Lewis of Intuit makes the distinction explicit: “There’s a difference between those AIs and TurboTax AI models, which have been trained by hundreds of millions of tax returns and financial data points and are up-to-date with the latest tax code and validated by tax professionals.”
H&R Block now includes its AI chatbot on free plans and offers unlimited chat with live tax professionals on all paid tiers. That’s a quiet acknowledgment that AI alone doesn’t cut it — even from the companies selling it.
The Bottom Line
Julie Siegel, former deputy chief of staff at the Treasury Department, put it plainly: “If Claude misinterprets an IRS form and gets it wrong, and that causes you to owe a lot of money, you are the one at the end of the day holding the bag.” The U.S. Taxpayer Advocate Service has noted that AI chatbots from major tax companies gave incorrect advice on complex questions up to 50% of the time in testing.
AI is genuinely useful as a brainstorming partner and a plain-English explainer of tax concepts. But for anything that touches your actual return — deductions, credits, filing strategy — a qualified human reviewer is still non-negotiable. The technology is impressive. It’s just not ready to take the wheel.
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