Experts advise caution before using AI chatbots to file tax returns.

• Some tax filers are utilizing AI-powered chatbots to assist them with their returns as the deadline approaches.
• A recent survey found that 19% of Americans would trust ChatGPT, a popular AI-powered chatbot, to review their income taxes, and 14% have already used it.
• April Walker, lead manager for tax practice and ethics at the American Institute of CPAs, advised taxpayers to "exercise caution" when using the software to file returns.

Some tax filers are utilizing AI-powered chatbots to assist them with their returns as the deadline approaches.

Experts advise taxpayers to exercise caution when seeking tax advice from generative AI.

A survey from CardRates.com found that nearly 1 in 5 Americans would trust ChatGPT, an AI chatbot from OpenAI, to review their income taxes, and 14% have already used it.

A Harris Poll found that 17% of respondents have used AI for tax filing and 45% are open to using it in the future.

April Walker, lead manager for tax practice and ethics at the American Institute of CPAs, advised filers to "proceed with caution" when using generative AI to file returns, despite many experts being optimistic about its future and its potential impact on taxes.

Before the deadline, you can still reduce your tax bill or increase your refund. An often overlooked retirement savings option can lower your tax bill. Some retirement savers may still be eligible for a special tax credit, according to the IRS.

OpenAI has warned users against using ChatGPT for financial advice, stating that they should seek a professional instead. This goes against their usage policies, as a spokesperson from OpenAI told CNBC.

AI chatbots 'aren't ready for prime time'

This season, there are various AI-powered guidance options for taxpayers, such as ChatGPT and chatbots from TurboTax, H&R Block, and the IRS.

Since 2022, the IRS has been utilizing voice and chatbots to address basic payment and collection notice inquiries, and has since increased its use of AI-driven technology.

The IRS has assisted over 13 million taxpayers and established approximately $151 million in payment plans since the January 2022 launch of its chatbot service, as announced by the agency in September.

Intuit TurboTax has introduced a generative AI-powered chatbot called "Intuit Assist" to simplify the filing process and improve the accuracy of returns, as stated by Karen Nolan, senior communications manager at Intuit TurboTax.

If a TurboTax filer ever has a question about their tax return, they can easily access a live tax expert at any time.

This season, H&R Block, which has utilized AI for years, introduced a generative chatbot called "AI Tax Assist" to aid DIY filers. The company provides guidelines on how to effectively utilize the tool.

A company spokesperson stated that they have a team of human testers who review questions and feedback daily to identify what to add and improve.

According to Subodha Kumar, professor of statistics, operations and data science at the Fox School of Business at Temple University, AI chatbots are not yet fully prepared for handling tax return filings.

Kumar discovered that AI chatbots are effective for addressing general tax queries but frequently give incorrect responses when dealing with more specific inquiries.

ChatGPT's training is "general purpose" rather than tax-specific, which may result in inaccurate answers to tax questions for filers.

Rewritten: The latest AI model, GPT-4 Turbo, provides answers with context up to April 2023, but the data isn't fully updated, with different knowledge cutoff dates depending on which version of ChatGPT you're using. This could be an issue with yearly inflation adjustments and tax changes from Congress and the IRS.

Kumar anticipates a significant advancement in tax-specific AI chatbots by the upcoming season, thanks to models specifically designed for tax.

Protect yourself from data 'leakage'

Although AI chatbots are not yet capable of providing personalized tax recommendations, there is still an opportunity for education.

"Michael Prinzo, managing principal of tax at CliftonLarsonAllen, stated that tools like that have the potential to be useful in a broad context. However, he emphasized that the effectiveness of the tool depends on the protection of personal information."

There is a risk of data security problems when entering financial data into AI chatbots like ChatGPT, as warned by experts.

Spencer Lourens, managing principal of data science, machine learning and artificial intelligence at CliftonLarsonAllen, stated that there could be various forms of data leakage.

Rewritten sentence: What are some possible income sources and tax breaks that I can consider?

It's important to verify any information obtained from AI-powered chatbots by cross-referencing it on the IRS website or with a tax professional, as advised by Walker of the American Institute of CPAs.