Dayjob: Tax – evaluating AI agents on 50 professional tax assignments

As a proof-of-concept, I've been using extra tokens to formalize the IRS tax forms and worksheets, mostly just to prove this can be done. The idea is that something like this could be adapted into a publicly maintained version of the IRS Direct File program (RIP). I'm up to an estimated 60% coverage of US federal tax situations so far.

https://github.com/emmilco/us-tax-model

My tax accountant mis-filed my taxes a couple years ago, which cost me about $20K (which I learned after I switched to another accountant later). Don't know if Claude / GPT would make the same mistake or not given SOTA today, but feels like there's an opportunity for models to be saving me thousands or tens of thousands of dollars a year.

I'm not sure LLMs will be good at doing taxes any time soon primarily because they're very bad at even simple math unless it's explained in words like in proofs. A good illustration of this is asking an LLM something like this: "If I put a container on a food scale, tare it, add 100g of peanuts, tare it, weigh 100g of almonds and then remove the container from the scale, what does the scale read?" LLMs completely puke all over themselves on this one. They do not account for not taring after the almonds and they do not see the weight of the container needs to be subtracted. The correct answer is minus (100g + container weight). Although this particular question also exploits another LLM weakness which is physical world concepts. LLM are just guessing. For an LLM to do taxes well, it would need to be trained on many scenarios and it would need a math service that it can use as a support service.

I have a non-trivial tax situation, as a US citizen living abroad. I prepare my own tax returns, never having found a cross-border tax preparer I trust, and have for the past few years, fed my draft return along with all the supporting paperwork into Claude. It has:

1. found errors, e.g. where I used the incorrect exchange rate (and managed to work out how I had made that error, which I was impressed by)

2. found items which would appear to be errors except for context it did not know

3. flagged areas where it disagreed with me as to the correct tax treatment, but accepted that the law is ambiguous (and in some cases I preferred its interpretation after additional research and in other cases I did not)

4. flagged areas where it disagreed with IRS guidance, and only acknowledged said guidance after I provided links to it

5. provided highly inaccurate estimated tax calculations, and not been able to fix its estimates even when challenged

So my takeaway is that it is a very useful tool for tax, but perhaps unsurprisingly, it is not good enough to dump all your paperwork into and expect a shiny return you don't need to check. (Possibly it is if you just have a W-2 and no other substantial income, but I can't speak for that scenario.)

There is currently a bill in Congress to finally allow regulation of paid tax preparers. Not sure if addresses AI, but probably not.

https://www.accountingtoday.com/news/new-bill-calls-for-irs-...

There is also an IRS form (14157) to report a return preparer complaint, which of course does not include an option to report a faulty AI.

PUBGM FLASH

Article I hoped to read: Evaluating AI agents on 50 professional tax evasions

I'm surprised Sonnet 5.5 did noticeably better than Opus and Fable. Same pattern in their other benchmarks.

I had Gemini help me with RMD calculations for an estate I manage. Advice was mostly good. Wrong about withholding for both US and CA. Missed deductions on US. Was accurate on MFJ and spousal death impacts.

I've found it so far more effective for preparation than for planning/advice.

I've got a plan to feed the laws and rules and instructions into the machine before the prompts - is RAG still cool? Maybe I should small-language this?

There's also: https://github.com/column-tax/tax-calc-bench

Not related but I hope QuickBooks learn something and make their software better.

I downloaded 1700 of my transactions and use AI to build an app for it, so I can analyze the transactions and make sure that everything is properly categorized. It used to take me whole day because of the Quickbooks. It took me less than an hour to go through all the transactions.

What is human baseline? How it stacks against 10% LLM accuracy?..

wonder if we should bring back https://taxheaven3000.com/ in the age of ai

Useless benchmark as it seems to be evaluating literally only the weights.

Ah, yes, the 'dude trust us' bench.

i want to always have a fast way of reviewing my tax returns without having to hassle my accountant or hire another one.

Sharing all my financial info with LLM companies is not something that I like.

EDIT: good point that paying accountant does not ensure avoiding it

wonderful, you made a good point that make me dislike situation even more

Kinda points to another thing... that our tax code is insanely bad.

I used Grok Bot and found out that I could offset some stock value going down and get back ~$300. I gave it my bank statements, email access (which had my stocks monthly report as attachment) and a few other things.

I'd have honestly never been able to do it myself - its just too tedious.

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