AI Does Your US Tax Return (Almost) Right – But “Almost Right” Is Still Wrong with the IRS

More and more Americans abroad are turning to ChatGPT and other AI tools to prepare their U.S. tax returns. Convenient, right? Or maybe not quite. AI can save you time — but with the IRS, “almost correct” still means wrong. Across the industry, accountants are seeing a wave of half-finished AI-generated returns that look neat on the surface but hide serious compliance chaos underneath.

In this article, we show where things go wrong, why “quick checks” usually backfire, and how to use AI smartly — without the IRS knocking on your door.

The Hype: AI Does Your Taxes for You!

Artificial intelligence can now write poems, pass exams, and (apparently) do your taxes. Just type “Make my U.S. tax return for 2024” into ChatGPT — and voilà, problem solved!

If only.

In reality, AI and the U.S. tax code go together like oil and water — especially for Americans living abroad, juggling FATCA, FBAR and foreign tax credits.

Accountants across the U.S. and Europe are seeing the same trend: clients walking in proudly with “AI-prepared” returns, asking for a quick review. In theory, convenient. In practice, a migraine.

Where It All Falls Apart

AI tools like ChatGPT can only work with the information you give them. And that’s where the trouble starts.

• Most taxpayers don’t actually know which details matter to the IRS.

• AI doesn’t know what it doesn’t know — but it will confidently pretend otherwise.

• The result: a return that looks fine… until an IRS audit peels back the layers.

Accountants then have to untangle the mess. A so-called “final check” of an AI return often takes as long as starting from scratch. But try explaining that to the client who insists “the AI already did most of the work.”

The Accountant’s Frustration

It’s not that professionals hate AI – they just hate cleaning up after it.

Checking an AI-generated tax return is like inspecting a self-built IKEA wardrobe with a few screws left over and being asked, “Could you just make sure it’s stable?”

To find out, you’d have to take the whole thing apart. And yes, it will cost more than the wardrobe itself.

Who’s Actually Responsible When the IRS Calls?

The IRS leaves no room for doubt: the person who signs the return is responsible.

Even if ChatGPT did the math, you are legally liable for every figure.

That’s especially risky for Americans living abroad: IRS mail can take weeks to arrive overseas, so by the time you find out something’s wrong, you might already have filed the next year’s return.

And if an accountant “just checks” your AI-filled return, they might share the liability too. Which explains why most professionals politely decline such requests – unless they can rebuild the return from scratch.

AI as a Smart Assistant — Not as an Accountant

Don’t get us wrong: AI can be a huge help. Just not the kind of help that signs your 1040.

Use it wisely:

1. Use AI for preparation, not submission.

   Let it help you sort documents, understand forms, or draft a checklist.

2. Always get professional review.

   Think of AI as an eager intern — fast, enthusiastic, and completely unqualified.

3. Use AI to ask smarter questions.

   It’s great for understanding tax basics before you speak to your accountant.

4. Keep your sources.

   “The AI told me so” is not an IRS-approved defense.

The Balance Between Convenience and Compliance

AI can be a clever assistant, but it’s not a replacement for expertise. Reconciling two tax systems requires human judgment — not algorithmic guesswork.

The temptation of “free tax help” is understandable. But the cost of an incorrect filing — penalties, interest, and endless IRS letters — is much higher. The smart American living abroad uses AI to save time.

The stubborn one uses it to save money – and ends up paying twice.

AI is not your accountant

AI is a brilliant tool, but it’s still just that: a tool. Like a hammer, it can build something beautiful — or destroy something fragile. It all depends on who’s swinging it.

So yes, go ahead and ask ChatGPT your tax questions. But if you finish your “AI-optimized” return and notice a few extra screws lying around?

Contact Americans Overseas – before the IRS does.

Get informed at Americans Overseas

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.

When we heard about the US tax system for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?). It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing proper information about the US tax system to avoid unnecessary panic and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your American tax obligations.

Contact us for more information

Further Reading

• Do I have to file taxes as an American living abroad?

• When Are You Considered a Taxable Green Card Holder?

• I received a letter from the bank