As Americans prepare to file their 2025 taxes, expect artificial intelligence (AI) to play a bigger role.

“AI has expanded from solely being a backend tool used within tax platforms to now serving as a front-facing ‘tax assistant’ that millions of taxpayers interact with directly,” said Eric Croak, CFP and president at Ohio-based Croak Capital, via email. “These AI capabilities can automatically categorize deductions, identify missing forms, and even recommend potential credits you may have forgotten about.”

However, with these AI-driven enhancements come new risks and considerations for taxpayers. From filing accuracy to algorithm audits and even scams, here are the major challenges to watch out for.

Look out for additional scrutiny on income by the Internal Revenue Service (IRS), potential inaccuracies with the One Big Beautiful Bill (OBBB) law changes, and an increase in deepfake scams.

Updates to the Discriminant Information Function (DIF) — a system the IRS uses to decide which tax returns to audit — make it easier to spot and flag income differences in real time.

With AI and data-matching tools, the IRS can compare reported income with:

W-2s: Used for earnings

Form 1099-DA: Used for cryptocurrency income

Form 1099-K: Used for income from payment apps, like Venmo or PayPal

Instead of manual reviews, the IRS uses AI to cross-check your reported income against your digital footprint, drawing on data from banks, public records, and even social media to see if your lifestyle matches your tax return.

While many of these measures target high earners and large corporations, they can trigger more IRS notices than before.

Read more: Americans are using AI for financial advice more than you think

Sometimes AI can get it wrong, especially for complicated tax scenarios.

“AI tax platforms can sound incredibly authoritative while being completely wrong,” said Croak. “If your tax situation involves anything more complicated than a W-2, I’d double-check any AI ‘recommendations,' specifically around multi-state income, Roth conversions, or crypto staking rewards.”

Accuracy is especially critical for the 2025 tax season, which introduced two major tax provisions from the OBBB law — no tax on tips and no tax on overtime.

Relying completely on AI to file your taxes could result in penalties for misapplying credits or deducting more than you should.

Scammers are increasingly using generative AI to facilitate fraudulent transactions or access sensitive data.

While email and SMS phishing aren’t new, they’re becoming more sophisticated, utilizing AI to create convincing tax-related content. Scammers also use voice cloning and AI-generated videos to impersonate accountants or even IRS representatives, or create fraudulent IRS or tax software websites.

These cyber threats may claim that the filer has not paid their taxes and that they face legal or financial ramifications if payment is not made immediately. Others may ask you to visit a website, which could then access your personal information and steal your identity.

While AI may bring risks to the 2025 tax season, there are steps you can take to ensure your return is accurate and protected.

Thoroughly document additional income: For example, on a 1099-K, a gift or reimbursement can be mislabeled as income, which can flag a discrepancy. Keep statements from third-party apps like Venmo or PayPal and ensure the transactions are categorized appropriately.

Lean on professionals for complex tax situations: Trust the advice of a certified public accountant (CPA) or other tax professional for complicated returns or for applying the new OBBB deductions. You can also explore the IRS Interactive Tax Assistant for authoritative and accurate on-demand help.

Keep your information private: Never respond to text messages, emails, or phone calls from entities asking for money or personal information, even if they claim to be the IRS. Go directly to IRS.gov if you have questions — you can even set up an Identity Protection PIN for additional security.

Add direct deposit info for faster refunds: To help combat fraud and payment errors, the IRS is phasing out paper checks altogether. Without up-to-date bank account information, your refund could be delayed by at least six weeks.

You can use AI to help you file your taxes. Many experts suggest using it as an assistant to help organize documents or answer commonly asked tax questions. But AI is not 100% accurate. There are risks if you fully rely on it to file, especially given the new provisions in the OBBB law.

While using AI to file your taxes doesn’t trigger an audit, it can increase your chances if it results in errors, underreporting, or deductions you’re ineligible to receive. The IRS looks for anomalies and income mismatches, among other factors, to decide whether an audit is warranted.

Yes, the IRS is increasingly using AI to analyze tax returns and close the significant tax gap between what’s owed and what’s paid. Recent updates to the IRS’s technology make it easier to compare reported income with data from third parties (such as Venmo, PayPal, banks, and e-commerce websites) to quickly flag discrepancies or lifestyle mismatches.

Learn how tax tools use AI to scan documents, flag deductions, and model refunds — and where privacy risks and human oversight still matter.

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