Income Tax News

The size of the Internal Revenue Service budget and whether it should see an increase was part of the focus of a Tuesday Senate Finance Committee hearing during which IRS Commissioner Danny Werfel played defense against what some members of Congress have called over aggressive audits.  

Werfel’s written testimony included a request that IRA funding be extended through fiscal 2034 which would “provide $104 billion over the 10-year budget window and is estimated to generate at least an additional $341 billion in revenue.” 

“The inflation Reduction Act funding has enabled the IRS to have one of its best filing seasons ever,” Werfel told lawmakers at the hearing. “Our ongoing success hinges on sustained investments to make sure that we have the right size workforce with the right training and tools, as well as modern technology.”  

“The inflation Reduction Act funding has enabled the IRS to have one of its best filing seasons ever,” said Werfel. “Our ongoing success hinges on sustained investments to make sure that we have the right size workforce with the right training and tools, as well as modern technology.”  

IRS

The increase in funding from the IRA became a political football and took a $20 billion financial hit during the debt ceiling negotiations. 

Werfel pressed the lawmakers on the future need for additional IRS funding while some Republicans pushed back. 

“You stated before that the IRS would have a decade to rebuild with the $80 billion in funding and there would be a healthy pressure to immediately take the funds and demonstrate what a well-funded IRS means,” said Ranking Member Sen. Mike Crapo, R-Idaho. 

“Many of us raised concerns about that level of funding, which was five times or more of the budget of the IRS,” Crapo said. “Part of my question could be when will it stop?”  

The public finance industry has been tracking the growth of the IRS budget with concerns that funding boosts would translate into higher audit rates for bond transactions.

Werfel addressed the notion of enhanced enforcements by saying, “You have to be really cautious in terms of how we scale our enforcement efforts so there’s no sense that there’s any politics in IRS operations, that we’re doing things aboveboard, nonpartisan, and we’re tackling this issue in a way that’s above any reproach.”

The Senate Finance Committee also represents a stop along the route for the passage of of the troubled Tax Relief for American Families and Workers Act. The bill left the House Ways and Means Committee, passed in the House in early February and has been stuck in the Senate ever since. 

The bill included adjustments to Low-Income Housing Tax Credits issued by the Treasury that lowers the volume requirements of state-issued private activity bonds. 

“In addition to small businesses, the bill will boost low-income housing, adding more than 200,000 new units across the country. It’s paid for by shutting down a pandemic-era tax program that’s riddled with fraud,” said Committee Chair Sen. Ron Wyden D-Ore. in a statement yesterday. 

Werfel’s written testimony included a proposal to require electronic filing of form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds, which is used to claim tax credit payments relating to interest on Build America Bonds. Under current rules the agency accepts electronic filing of the form by doesn’t require it. 

Werfel spent most of his time defending the agency’s Free File program. Democrats like the pilot program while, Republicans believe the private sector is better suited for the job. 

IRS Free File was launched in February 2013 as public-private partnership with seven leading tax software providers. The service comes with eligibility requirements for taxpayers including age, income and state residency.

Originally Appeared Here

If there’s one thing we should be able to agree upon, it’s that everyone should pay the taxes they owe without having to pay for the privilege of doing so. This year, for the first time, residents of 12 states who file simple tax returns can file online for free using the IRS’s new Direct File portal.

Thanks to funding from the Inflation Reduction Act and as part of an ambitious modernization effort, this new public tool makes tax filing faster, easier and cheaper for eligible filers. The IRS wisely started small, piloting Direct File in four states — Arizona, California, Massachusetts and New York — each agreed to implement an integrated option for filing their state tax return and eight states without a state income tax. Similarly, eligibility for Direct File is limited to filers with certain types of income who don’t itemize their deductions — people with wage and salary income from an employer, Social Security benefits, modest interest income and unemployment insurance.

Importantly, Direct File can be used to claim the child and earned income tax credits, providing valuable support to millions of working families. In fact, helping families claim these credits by eliminating the cost of tax filing may be one of Direct File’s most important contributions. In 2020 — the most recent year for which data are available — nearly one out of every four individuals eligible for the EITC didn’t claim the credits they were owed.

Direct File was also designed to meet the needs of other segments of the public who aren’t served by existing private systems. Filers can prepare their returns on a smartphone, tablet or desktop, and real-time online support is available weekdays and evenings in Spanish and English from a live IRS professional — not an AI-powered chatbot.

Early reviews of Direct File show strong support, with users reporting it as “the fastest I’ve ever done my taxes” and “honestly the easiest tax experience I’ve ever had.” One reporter said that “the government has created an actually good piece of software.”

The enthusiastic response to a free online filing option shouldn’t be surprising. The typical taxpayer spends 13 hours and $270 each year preparing a federal tax return. Money saved by filing for free is money back in families’ pockets — money that can be used for rent, groceries and other necessities.

Direct File is arguably a long-overdue solution. The tax preparation software industry lobbied hard to block previous bipartisan public portal efforts dating back to the late 1990s. The industry deliberately suppressed participation in its privately managed alternative, resulting in just 3% of filers using the industry-backed program in 2020, in contrast to the estimated 70% of filers eligible to do so. Private firms also used hardball tactics to upsell consumers, leading state attorneys general to secure a record-breaking settlement with TurboTax’s owner for deceptive advertising.

As IRS Commissioner Danny Werfel has made clear, Direct File is a choice.

Individuals who prefer to buy private software or use an accountant are welcome to do so. However, the success of this year’s pilot suggests that Direct File is a choice a large share of the 91% of Americans with relatively simple tax situations will choose to make.

To scale the pilot to more tax filers in more states, the IRS must work quickly with state tax administrators to ensure filers who wish to use a public option can seamlessly file their federal and state tax returns. It will also require sustained support and the funding needed to reverse a decade of disinvestment and rebuild the IRS to improve customer service and ensure the nation’s tax laws are enforced effectively.

In the meantime, if you qualify for the Direct File pilot and have yet to complete your tax return, there’s still time to check it out. If you’ve finished your taxes, give yourself a well-deserved pat on the back. For all of us — filed or yet to file — the new Direct File tool represents government at its best: saving families time and money. That’s something to cheer about.

Happy Tax Day!

Jean Ross, a senior fellow for economic policy at the Center for American Progress, wrote this for InsideSources.com.

Originally Appeared Here

Twelve years after a hacker stole personal information from 3.6 million people through South Carolina tax returns, the state’s top police officer says he thinks he knows who did it

By

JEFFREY COLLINS Associated Press

April 10, 2024, 4:23 PM ET

• 4 min read

COLUMBIA, S.C. — Twelve years after a hacker stole personal data from more than 3.6 million people in South Carolina by obtaining Social Security numbers and credit card information from tax returns, the state’s top police officer said Wednesday he thought he knew who did it but wasn’t ready to name anyone.

State Law Enforcement Division Chief Mark Keel was careful not to release many details during his confirmation hearing for another six-year term. He said what authorities didn’t find shows that the state had the right response after the U.S. Secret Service identified the hack and data breach in October 2012.

“I think the fact that we didn’t come up with a whole lot of people’s information that got breached is a testament to the work that people have done on this case,” Keel said.

A contractor with the state Department of Revenue clicked on a malicious link in an email in the summer of 2012, allowing a hacker to access 6.4 million state income tax returns. They collected the Social Security numbers of 3.6 million people and almost 400,000 credit and debit card numbers.

The state paid $12 million for identity theft protection and credit monitoring for its residents after the breach, At the time, it was one of the largest breaches in U.S. history but has since been surpassed greatly by hacks to Equifax, Yahoo, Home Depot, Target and PlayStation.

Democratic Sen. Brad Hutto has been searching for answers for over a decade and has been repeatedly told it was an active investigation and couldn’t be talked about. Hutto decided to ask Keel about the breach Wednesday to try to get answers in public.

“Now you can tell us that y’all paid somebody in Azerbaijan $28,000 or whatever it was,” Hutto said.

Keel refused again to say if South Carolina paid a ransom to the hacker to get the information back.

“I’m probably still not going to be totally transparent with you, OK?” Keel said. “I’m not going to lie to you either.”

Keel justified the insurance for taxpayers and the federal and state investigative work by saying the quick action prevented the hacked information from being used and the proof was what didn’t happen — an onslaught of bogus credit card charges or people using stolen ID information.

In retrospect, the state may not have had to spend $12 million on insurance. But that is with the benefit of hindsight, Keel said.

“We didn’t really have a choice,” Keel said. “It was something that we had to do because at the time this happen we had to start trying to protect people immediately. We didn’t have time for the investigation to play out the way it ultimately played out.”

Hutto responded: “Did it play out? Do you know who did it?”

“Yes, sir, I know who did it,” Keel said, refusing to give any other details.

Hutto asked if the person had been prosecuted, then laughed and said it might have been because the person was paid off.

Keel didn’t respond to the bait. “If we could ever get to this individual, they may be,” he said.

The Senate subcommittee approved Keel’s nomination for an additional six-year term. It now goes to the full Judiciary Committee.

Keel has worked at the State Law Enforcement Division for nearly his entire 44-year law enforcement career, other than a three-year stint as the Department of Public Safety’s director.

He rose through the ranks in jobs like helicopter pilot and hostage negotiator before becoming the agency’s chief of staff in 2001. He spent a year as interim director in 2007 before being passed over by then-Gov. Mark Sanford for the top job.

Gov. Nikki Haley chose Keel to lead the State Law Enforcement Division in 2011.

Originally Appeared Here

The 2024 tax filing season will wrap up in just a couple of days now, and the IRS has been processing returns and delivering refunds to millions of Americans. If you’ve waited until now to file this year’s taxes, you might want to check out this IRS program that enables millions of Americans to file their federal tax returns for free. 

IRS Free File is a partnership between the IRS and seven of the country’s biggest online tax-prep companies. If your adjusted gross income was $79,000 or less in 2023, you are eligible to use Free File to process and submit a simple return for free. Some participating companies will even process your state return.

This story is part of Taxes 2024, CNET’s coverage of the best tax software, tax tips and everything else you need to file your return and track your refund.

2024 has been a big year for Free File. This year, the program is seeing a year-over-year increase in use of nearly 10%. So far this filing season, 943,000 filers have taken advantage of the program. 

Here’s everything to know about Free File: who qualifies for it, what it can do and what you’ll need to take advantage of it. 

For more, check out the best tax software for 2024, our cheat sheet for filing your taxes this year and everything to know about the child tax credit in 2024. 

What is IRS Free File?

IRS Free File is a nonprofit partnership between the IRS and the Free File Alliance, a group of commercial tax-prep companies that have agreed to process and file federal returns electronically at no charge. (Some may also offer free state returns.) 

If you use Free File, you’ll be directed to one of these companies’ sites to complete your return with step-by-step instructions.

• 1040Now
• Drake (1040.com)
• ezTaxReturn.com (offers both English and Spanish)
• FileYourTaxes.com
• On-Line Taxes
• TaxAct
• TaxHawk (FreeTaxUSA)
• TaxSlayer

Note that Intuit Turbo Tax withdrew from the program in 2021.

Who qualifies for IRS Free File?

Participating tax-preparation providers set their own eligibility rules, but individuals whose adjusted gross income, or AGI, was $79,000 or less in 2023 will likely find an offer for which they qualify.

The system is only set up to process relatively simple returns.

If you make more than $79,000, the IRS still provides fillable forms to let you file your federal taxes online, although there is no step-by-step guidance.

How does IRS Free File work?

The Free File program can answer basic questions, perform calculations and file your federal return with the IRS.

“Our software offers step-by-step help to get your federal taxes done quickly, safely, securely and at absolutely no cost,” Free File Alliance director Tim Hugo said in a statement. 

You can access the program on your computer, smartphone or tablet. It cannot be done in person or through the mail. In addition, Free File can’t be used to submit returns for any year prior to 2023.

To file with IRS Free File, you’ll need:

• Income statements (W2s, 1099s, etc.)
• Social Security numbers for you and any relevant spouse or dependents
• Your 2021 tax return to access your adjusted gross income

Once you have your documentation, follow these steps: 

1. Go to the IRS Free File website.

2. Click the Use Free Guided Tax Preparation button. Then hit Find Your Trusted Partner tool to find an offer for the right product for you. Alternatively, you can use the Browse All Trusted Partners tool to review each offer.

3. Select the best product for you.

4. Follow the links to the provider’s website to begin your tax return. 

Is IRS Free File really free?

According to the IRS, you can’t be asked to buy any products or services in exchange for having a federal tax return prepared by a participant in the Free File program.

You may be charged to file a state return.

For more tax tips, here’s how to find out when you’ll get your 2024 tax refund and the fastest way to get your 2024 tax refund. 

Originally Appeared Here

LINCOLN — Gov. Jim Pillen opened the door Thursday to pausing or extending a planned decrease in state income taxes to help fund his property tax reduction plan.

Pillen’s property tax plan, Legislative Bill 388, was placed in flux on Tuesday when sponsors pledged to remove a controversial 1-cent hike in state sales taxes — a major component of the plan — to help finance a $1 billion shift from local property taxes.

The decision has set off a search for a new source of funding to finance the proposal and sparked speculation that pausing the gradual income tax reductions passed by the State Legislature last year might be the solution since it would provide a similar amount of revenue.

It also prompted the main sponsor of LB 388, State Sen. Lou Ann Linehan of Elkhorn, to pledge that she wouldn’t bring the bill back unless she could get agreement on how to replace the lost revenue.

Top bracket to drop to 5.84% this year

Under last year’s tax law, the state’s top income tax bracket is scheduled to drop to 5.84% in tax year 2024, and then continue to drop gradually until reaching 3.99% in tax year 2027. The cut was projected to reduce income taxes by about $450 million in the next fiscal year. That compares to the projected income of $527 million from a sales tax increase in the same fiscal year.

In comments to the Examiner on Thursday, Pillen said he was encouraged that several ideas are emerging to replace the revenue that a 1-cent hike in sales taxes would have generated.

“We’ve got everybody working together,” he said. “We’ve got lobby groups, instead of saying ‘No, no, no’ to ideas, people are coming forward with ideas.”

What about pausing the income tax cuts?

“We can’t be satisfied with 3.99%,” Pillen said. “I could be a big strong advocate of let’s extend our income tax conversation to get it down to 3% by 2032, for example.”

Pause called wrong-headed

One argument being advanced about “pausing” the income tax cuts is that it wouldn’t be a “tax increase” but just a delay in the planned decreases.

But opponents, especially Nebraska’s business groups, have argued that a deal was a deal and it would be wrong-headed to reverse course on the income tax cuts.

As a possible show of concern about the possibility, the executive committee of the Greater Omaha Chamber of Commerce scheduled a meeting to discuss the issue of pausing the income tax cuts.

The chamber has also expressed concerns about a companion bill to LB 388, which increases state aid to K-12 schools and lowers tax levies, and whether it might harm a key economic development tool, tax-increment financing or TIF.

Conservative groups opposed hike

Pillen’s proposed 1-cent hike in state sales taxes was assailed by conservative groups as a tax increase, by business groups as a “tax shift” that didn’t lower taxes, and by progressive groups as hurting low-income Nebraskans. It lacked the 33 votes last week to advance.

His administration had defended the tax hike as rebalancing the state’s three main sources of taxes, which currently has about $5 billion a year being paid in property taxes and less than $3 billion being paid in sales taxes. Officials also maintained that high property taxes were forcing hardship on homeowners and making farmers less competitive and that a shift to sales taxes wouldn’t be noticed.

Pillen initially called for a 40% reduction in local property taxes, as well as an increase in per-student “foundation aid” to K-12 schools from $1,500 to $3,000. LB 388, as advanced by the Legislature’s Revenue Committee, offered a reduction of about 30%.

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Originally Appeared Here

STATEN ISLAND, N.Y. — Americans are receiving, on average, more than $3,000 back on their annual tax returns this year.

Through March 22, the most recent date currently available, the agency has issued 54,990,000 refunds, roughly 7.3% fewer than the 59,342,000 that had been issued by this time last year, according to the latest Internal Revenue Service (IRS) data.

The reason for the reduction in refunds issued to date is a simple one; the agency officially began processing tax returns one week later this year, with the 2023 filing season beginning on Jan. 23 and the 2024 filing season beginning on Jan. 29.

The average refund amount through March 22 was $3,081, roughly 6.1% higher than the average refund of $2,903 at that time last year.

Through Feb. 9, the average had been just $1,741, but has increased dramatically now that the IRS has begun issuing refunds to taxpayers who claimed the Earned Income Tax Credit or Additional Child Tax Credit, the refundable portion of the Child Tax Credit.

Due to the Protecting Americans from Tax Hikes (PATH) Act, which took effect during the 2017 filing season, the IRS legally cannot issue refunds or credits to anyone who claimed an Earned Income Tax Credit or Additional Child Tax Credit before Feb. 15, with the agency expecting those who claimed those credits to receive their direct deposit refunds by Feb. 27.

The policy was implemented “to help prevent revenue loss due to identity theft and refund fraud related to fabricated wages and withholdings,” according to the IRS.

TRACKING YOUR REFUND

If you’re one of the millions of Americans who have already sent in their tax returns, there are online portals that will allow you to monitor the status of your refund.

For federal taxes, residents can use the IRS “Where’s My Refund” tool or the IRS2Go mobile app to see when their refunds have been received, processed and sent.

Refund status will appear roughly 24 hours after you e-file a current-year return, three or four days after you e-file a prior-year return or four weeks after you file a paper return.

To access the information, which is updated overnight each day, residents must provide their Social Security or individual taxpayer ID number (ITIN), filing status and exact refund amount on their return.

Once refunds are sent, those using direct deposit should receive their refund within five days, while those expecting checks in the mail may have to wait several weeks.

For state taxes, New Yorkers can visit the Department of Taxation and Finance website and click “Check refund status.”

This allows residents to see if their return has been received; when it’s being processed; if the return requires additional review; if the state requires additional information; if a requested refund amount has been adjusted and when a refund has been issued.

NEW TAX INCOME BRACKETS

While tax rates have remained the same as last year, the IRS has announced new brackets with adjusted thresholds, boasting upper limits that are 7% higher than last year.

In addition to the new tax brackets, the standard deduction, the amount you can deduct to adjust the amount of income on which you’re taxed, has also increased from $12,950 to $13,850 for single filers and from $25,900 to $27,700 for married couples filing jointly.

Here’s a look at the new tax brackets that will be used when filing in 2024.

MARGINAL TAX BRACKETS FOR SINGLE FILERS

• $11,000 or less in taxable income – 10% of taxable income
• $11,001 to $44,725 in taxable income – $1,100 plus 12% over $11,000
• $44,726 to $95,375 in taxable income – $5,147 plus 22% over $44,725
• $95,376 to $182,100 in taxable income – $16,290 plus 24% over $95,375
• $182,101 to $231,250 in taxable income – $37,104 plus 32% over $182,100
• $231,251 to $578,125 in taxable income – $52,832 plus 35% over $231,250
• $578,126 or more in taxable income – $174,238 plus 37% over $578,125

MARGINAL TAX BRACKETS FOR MARRIED COUPLES FILING JOINTLY

• $22,000 or less in taxable income – 10% of taxable income
• $22,001 to $89,450 in taxable income – $2,200 plus 12% over $22,000
• $89,451-$190,750 in taxable income – $10,294 plus 22% over $89,450
• $190,751-$364,200 in taxable income – $32,580 plus 24% over $190,750
• $364,201 to $462,500 in taxable income –$74,208 plus 32% over $364,200
• $462,501 to $693,759 in taxable income – $105,664 plus 35% over $462,500
• $693,751 or more in taxable income – $186,601 plus 37% over $693,750

Originally Appeared Here

Government websites have a mostly deserved reputation for being terrible and driving us nuts.

So it was a pleasant surprise to try IRS Direct File, a new (and politically controversial) option to file a tax return online directly with the Internal Revenue Service. Direct File works like TurboTax, but it’s run by the government and free to file a federal tax return.

Most people aren’t eligible to file their taxes with Direct File. I thought I could, was rejected partway through and instead used TurboTax.

Direct File was not perfect. Still, I liked using the IRS website — and I definitely prefer it over TurboTax, which annoys me with constant nags for more money and my private data.

You might feel differently about it. I’ll tell you about my experience with Direct File and why it’s important even if you don’t use the site.

We deserve effective online government services. Direct File is visible proof that government websites don’t have to stink.

How to file your taxes with IRS Direct File (if you can)

The first thing to know about Direct File is that it’s a trial project. And you probably can’t use it.

You can only file your tax return with the new IRS site if you’re in one of 12 states including Texas, New York and California; work for an employer rather than yourself; and meet many other eligibility requirements. (Read more here.)

Just going through Direct File’s seven online screens of eligibility checklists and doing an online identity verification almost made me quit.

But once I did start my tax return, Direct File felt pleasantly similar to TurboTax, which I have used for years.

Direct File guides you through yes or no questions about your income and potential tax breaks. You can chat online for help, too.

There are far fewer questions than there are in TurboTax because Direct File only permits use by people who have simple tax returns.

There were things I didn’t like. Unlike TurboTax, which had a digital copy of my W-2 tax form and let me pull in digital records from my investment accounts, I had to type into Direct File details like my income and interest payments.

That took more time and left room for me to mistype numbers.

The biggest problem was that part way through, Direct File told me that I couldn’t actually file my federal tax return with the site. Ugh.

I missed a detail in the eligibility checklist that you can’t use Direct File if you had more than $1,500 in interest income last year. I did. I was also nixed because I paid into a Health Savings Account, a fund through my employer to help pay for medical expenses.

I went through the whole Direct File process anyway to see how it went. And again, I was pleasantly surprised that the website was easy to use with clear questions and helpful explanations. And did I mention that it’s free? (If you can use it.)

A warning: Don’t mix up Direct File with existing IRS options to complete your tax return online.

You can also set up an account on the IRS Free File Fillable Forms website. Unlike Direct File or TurboTax, you need to go through the tax form yourself line by line. (Read more here about free or low-cost tax filing options.)

A colleague, Monica Rodman, found it confusing to use Free File Fillable Forms. Monica was so unsure of the results that they double checked the work with TurboTax. The whole process took 12 hours!

Monica gave up and had a good experience using Free Tax USA — which charged nothing to file a federal return and $15 for a state return.

The Free File Alliance, which runs Fillable Forms and a program called IRS Free File, has said about 463,000 households filed returns using Fillable Forms last year. NPR recently reported that more than 50,000 people have tried Direct File so far. Tens of millions of Americans file taxes with TurboTax each year.

The problem that IRS Direct File is trying to solve

Critics of Direct File in Congress and industry say the government is wasting money by replicating existing services like those from Intuit’s TurboTax, H&R Block and smaller tax preparers.

I can’t answer whether Direct File should exist or not. I can say as a technology writer and longtime user of TurboTax that commercial tax software drives me batty.

I like using TurboTax. But I hate that it nudges me over and over to pay more for extra features I don’t want. TurboTax also repeatedly tried to get me to use Credit Karma, a personal finance site also owned by Intuit.

And TurboTax wants permission to use private information like your income and debt to make more money pitching you financial services. (Here’s how to say no to that.)

Direct File didn’t work for me, but I liked that it had zero yucky nagging as TurboTax has.

Intuit didn’t respond to my questions.

I know that not everyone will trust a government tax website. But I appreciate a choice between filing my tax return for free directly with the IRS or using a paid commercial website.

Hillary Hartley, chief executive of U.S. Digital Response, a nonprofit that helps governments create technology services, said citizens and government agencies benefit from competent public websites like Direct File.

We expect technology in our lives to just work. “When government can deliver on that same promise, then it pays dividends in rebuilding trust in our institutions,” Hartley said.

Julie Zauzmer Weil contributed to this report.

• Yes, you can file your tax return for free. Here are your options.
• The IRS says nearly 1 million people have an unclaimed tax refund from 2020. Here’s how to find out if the IRS owes you money.
• TurboTax and H&R Block now use AI for tax advice. It’s awful.

Originally Appeared Here

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Originally Appeared Here

As the clock ticks toward the tax filing deadline, some people might be desperate enough to turn to a bevy of new AI chatbots to do it all for them.

One word of advice: Don’t. 

There’s a reason we warn kids not to use ChatGPT to write an essay or finish their history homework. And the bot is especially bad at math. Add in the intricate and often ambiguous realm of tax laws that vary by state, and it could be a recipe for disaster − or even worse − an audit. 

This question of whether it’s a good idea to use generative AI for tax help comes at a time when the nation’s most popular tax preparation companies, Intuit’s TurboTax and H&R Block, launched generative AI “assistants.” 

So far, reviews of “Intuit Assist,” specifically in Turbo Tax’s DIY “Self-Help” section, and H&R Block’s “AI Tax Assist,” which is part of their paid packages, underscore why this sort of AI won’t replace human expertise any time soon. 

Not that they’re meant to, Turbo Tax spokeswoman Karen Nolan said on a Zoom call. And it’s important taxpayers understand that. 

How can generative AI help with my taxes?

Intuit Director of Design Jim Fell and Nolan walked me through some of the most common ways people can − and cannot − use the new tool. 

“Our AI is a digital front door to simple help flagging missing information or inconsistencies while also providing access to expert help from a human being,” Nolan explained as Fell showed me specific use-cases on screen. 

The main ways the AI chatbot pops up right now are to flag an accuracy check, such as missed information or potential “clumsy-thumb” typos. It also offers deeper, more detailed explanations of finished returns and can quickly translate between languages for filers who might be overwhelmed trying to figure everything out in English. 

That last part is the most impressive bit of AI magic that’s easy to see firsthand. The rest of the machine learning tools run mainly in the background and have for years. Nolan says it has been checking for tax return accuracy, cutting down on repetitive tasks, and helping find obscure deductions for nearly a decade.

Does H&R Block have a new AI tax tool?

H&R Block’s new “AI Tax Assist” is a more prominent part of its website and similar to what many of us have played around with using ChatGPT, Copilot or Gemini. 

Like Turbo Tax’s Intuit Assist, it’s best to use H&R Block’s AI Tax Assist more for a simple query or as a failsafe for common mistakes. For instance, it does well defining tax terms and explaining something you might not understand (such as the simplest, most easy-to-understand terms in the filing process). 

Is AI just bad at math? 

Remember when I said that AI doesn’t do “facts” very well? It’s abundantly clear that you can’t ask ChatGPT or any other AI conversation bot a critical or confusing tax question and trust its answers. 

That’s largely because different AI assistants are trained on different types of information, kind of like if you raised a child without ever teaching her what colors are called, then asked her what color an apple is. She might try to come up with an answer, but without being taught, a guess is as good as you’re going to get. 

In the case of Intuit Assist, the company says the bot was trained on current tax code as well as the company’s own vast data trove based on its tax prep experience. That information, combined with whatever it learns from your own tax documents along the way, forms its knowledge base and dictates the answers you receive when asking it a question. 

H&R Block’s AI Tax Assist works in a similar way, and the company says it used its own archive of tax laws, with a few tweaks here and there from their own accountants, tax law experts and the like. 

Neither of these bots is trained from information scraped from the internet, which is reassuring, but that doesn’t prevent them from falling victim to AI accuracy issues. All versions of consumer AI currently have a “hallucination” problem. They often spit out information that sounds “right” but is out of date, inaccurate or just plain made up.

Spring cleaning for your finances:12 money moves to make right now

Here’s how not to use AI to do your taxes

In some early reviews of Intuit Assist and AI Tax Assist, a fellow technology columnist asked the tax chatbots a slew of much more specific and nuanced hypothetical questions, and it didn’t go well. 

Both company’s bots responded with vague, misleading or just wrong answers, specifically when his questions were around cryptocurrencies, multi-state returns and other uncommon filing situations. 

For example, when asked a question about where a college student should file taxes when they go to school out of state, the journalist reported that TurboTax’s bot provided “irrelevant advice” and H&R Block’s AI assistant erroneously suggested the student would have to file in both states. The truth is, the person would have to file only in a state where they earned income, but neither AI helper nailed the answer. 

These situations reveal the limitations of artificial intelligence, but those specific shortcomings aren’t necessarily applicable across the board, spokespeople from both companies say. 

“If Turbo Tax is powering the AI, you can trust it,” Nolan said. “We don’t expect our customers to try to manipulate it the way (that journalist did). That wouldn’t really happen if you’re doing your taxes.”

When I asked Nolan about the trouble people might have turning to an AI chatbot in the Self Help section specifically, she explained, “If you have questions like that, a DIY product is probably not what you need.” 

Nolan also reiterated that in the hypothetical instance it gives you bad advice, the company’s system would flag that before it allowed you to finish and file. 

“AI won’t file your taxes for you, even if you’re using our mobile app and not speaking with a human. AI is not filing your actual return. We will absolutely capture inaccuracies before anything gets to the IRS,” Nolan said. 

Be sure to read the fine print

Turbo Tax identifies its AI chatbot as a Beta version product, which mean it’s still working out the kinks. It has several disclaimers in the fine print that warn people advice might not be spot-on. Same with H&R Block. 

“Gen-AI for the industry is still in its infancy,” Nolan said. “You won’t see us using AI to do math. We have other things doing the math.”

To TurboTax’s credit, the Intuit Assist bot did help me along the way, even if the standard checks and issue alerts would have accomplished the same thing, albeit a bit later in the process. But the most important thing about these AI tax bots is that they’re designed to get better over time. Fast-forward a few years, and both tax assistants will probably be miles better than they are today, and they learn as they go. 

Big business and taxes:Major companies haven’t paid federal income tax in 5 years. How could that be?

Child tax credit:How much is the child tax credit for 2023? Here’s what you need to know about qualifying.

Your tax return:Here are all the ways to check the status of your 2023 tax return

ACA and taxes:Your ACA plan’s advance premium tax credit may affect your refund or how much you owe.

Will we use AI to do our taxes in the future? 

Future versions of these tax-minded assistants will be smarter and more robust than the versions we have today. That’s the promise of generative AI, and we’ll all grow to expect it as artificial intelligence gradually takes over more of our daily tasks. 

You know those prescription drug commercials on TV? It’s kind of like that right now. Here’s this amazing new tool that can save you time, give you “more confidence” and maybe even save you money. But the list of potential problems using it without guardrails on something as crucial as your taxes comes with a list of potential “side effects” so long it makes you laugh out loud. 

Fortunately, humans at TurboTax and H&R Block are still running the show, and they both guarantee the accuracy of your tax return, regardless of whether you use the available AI features. If you get audited, they’ll give you advice and guide you along the way, but additional safeguards like TurboTax’s Audit Defense or H&R Block’s Peace of Mind Extended Service Plan, where the companies actually deal with the IRS on your behalf, still cost extra. 

Jennifer Jolly is an Emmy Award-winning consumer tech columnist and on-air correspondent. The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY. Contact her atJJ@Techish.com. 

Originally Appeared Here

White House highlights cops’ marijuana concerns; Lawmakers on SAFER Banking; PA legalization opportunity; KS medical cannabis bill

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/ TOP THINGS TO KNOW

The Internal Revenue Service said in a new memo that marijuana industry cash is not necessarily “suspicious.”

The White House Office of National Drug Control Policy’s annual budget submission to Congress highlights concerns of law enforcement agencies around the country that claim marijuana legalization has not diminished the illegal cannabis market.

Senate Banking Committee Chairman Sherrod Brown (D-OH) and House Majority Whip Tom Emmer (R-MN) both voiced support for enacting marijuana banking legislation.

The Pennsylvania House Appropriations Committee chairman says it’s “high time” to legalize marijuana and lay the groundwork for businesses in the state to export cannabis to other markets if federal law changes—and he sees a “real opportunity” to do so this session.

The Kansas Senate Federal and State Affairs Committee filed a bill to create a limited medical cannabis pilot program, but advocates say it would put too many restrictions on patient access and create “monopolies” in the market.

A new federally funded study found that legalization of “adult-use sales were not associated with an increase in lifetime or [past 30-day] marijuana use” among middle school students.

/ FEDERAL

The White House tweeted, “President Biden and Vice President Harris believe no one should be jailed just for using or possessing marijuana. That’s why our Administration has pardoned tens of thousands of people for federal marijuana possession. Last week, @VP heard directly from people who have received these pardons for prior marijuana convictions. Our Administration will continue to work to advance long-overdue criminal justice reforms.”

Former President Donald Trump suggested the UK’s Prince Harry might have to be deported if it turns out he lied about prior drug use on his visa application.

Former White House National Drug Control Policy Chief Medical Officer Roneet Lev said it’s an “insult” to use the phrase “medical marijuana.”

Sen. Elizabeth Warren (D-MA) praised Massachusetts Gov. Maura Healey’s (D) mass marijuana pardon move, calling it “a powerfully important step” and saying, “I’ll keep working to legalize marijuana nationwide and repair the harms of an unjust criminal legal system.”

Rep. Morgan Griffith (R-VA) inserted comments into the Congressional Record praising a recently deceased judge who as a college student “was charged with possession of heroin and marijuana, but later had those charges dropped when he agreed to become a police informant.”

/ STATES

A senior advisor to Arkansas Gov. Sarah Huckabeen Sanders (R) is leading a group seeking to defeat proposed ballot initiatives on legalizing marijuana and other issues.

The Connecticut legislature’s Transportation Committee defeated an amendment to make it easier for police to pull over drivers who they suspect are smoking marijuana.

A Tennessee senator discussed his concerns about legalizing marijuana.

A New Jersey appeals court ruled that a town has the right to withhold support from a marijuana business that is seeking a state license.

Rhode Island regulators published guidance on allowable marijuana products.

Colorado regulators published average market rates for retail marijuana.

Michigan regulators published a monthly report on disciplinary actions against marijuana businesses.

Vermont regulators sent a reminder about marijuana business license renewals.

The Warm Springs Tribal Council, located within Oregon, is delaying a referendum on allowing a marijuana dispensary until June 5.

Nevada regulators will consider marijuana business issues on Thursday.

—
Marijuana Moment is tracking more than 1,400 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.

Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
—

/ LOCAL

Richmond, Virginia’s mayor tweeted, “While Glenn Youngkin has stifled attempts to legalize the recreational sale of marijuana in VA, the Biden Administration is taking real steps to move our country forward. Let’s keep up the momentum!”

/ INTERNATIONAL

Statistics Canada reported that nearly 72 percent of marijuana consumers buy only from legal sellers.

The Kenyan attorney general’s office is urging a court to reject a lawsuit brought by Rastafarians seeking to overturn cannabis criminalization.

/ SCIENCE & HEALTH

A study found that “when states permitted recreational marijuana use, there was no corresponding change in the number of foster care entries related to drug abuse, relative to control states” and that “for the legalization of medical marijuana, we find a roughly 20 percent decrease in the number of cases associated with parental drug abuse in the second year after legalization, followed by a roughly 30 percent decrease in the third and fourth years.”

A study found that “patients self-reported very good efficacy and tolerability” of medical cannabis.

/ ADVOCACY, OPINION & ANALYSIS

The New York Post editorial board and the New York Daily News editorial board cheered Gov. Kathy Hochul’s (D) move to launch a review into the state’s marijuana business licensing process.

A Show-Me Institute official authored an op-ed arguing that local Missouri marijuana taxes “are an opportunity to improve both the current budgets and the long-term tax environment for cities and counties.”

/ BUSINESS

Curaleaf Holdings, Inc. is acquiring Northern Green Canada.

Meta is reportedly being investigated by federal authorities over its potential role in the illicit sale of drugs on its platforms.

The Cannabist Company Holdings Inc. completed a private placement of $19.5 million aggregate principal amount of senior secured convertible debentures.

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Photo courtesy of Brian Shamblen.

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Originally Appeared Here