are they going to genai for this?

Yes, and that is exactly the "AI threat" that triggered Intuit's recent 17% workforce cut. Investors are terrified that taxpayers will use free chatbots instead of paying for TurboTax's premium advice tiers.

Recent surveys from 2026 show that roughly 26% to 30% of taxpayers plan to use generative AI tools like ChatGPT, Claude, or Gemini to help prepare their returns this year.

However, taxpayers aren't using GenAI to replace tax software entirely—they are using it to replace the expensive human experts that companies like Intuit charge a premium for. Here is how the shift is playing out:

How Taxpayers Are Using GenAI

While a chatbot cannot legally e-file a return with the IRS, users are leveraging them to bypass the expensive "TurboTax Live" or CPA consultation fees.

• Translating Tax Jargon: Instead of paying an expert to explain complex tax situations, users are asking AI to explain concepts in plain English (e.g., "I earned $4,000 in tips and $12,000 in freelance income, what forms do I need?").
• Hunting for Deductions: Users are prompting AI with their job descriptions and lifestyles to generate checklists of potential write-offs they might have missed.
• Hybrid Filing: Taxpayers are using free GenAI for the heavy lifting of tax research and strategy, and then using a "truly free" software (like FreeTaxUSA) just to plug in the final numbers and hit submit.

The Major Risks (Why Experts Are Sounding the Alarm)

Despite the rising adoption, cybersecurity experts, tax professionals, and the IRS are aggressively warning consumers about using general-purpose AI for taxes.

• Massive Privacy Threats: General chatbots are not secure tax portals. Uploading W-2s or typing in Social Security Numbers, employer details, and bank account routing numbers into ChatGPT exposes highly sensitive data that could be stored on third-party servers or exposed in a data breach.
• Bad Math and Hallucinations: Large Language Models (LLMs) are built to predict text, not do precise arithmetic. Users have frequently reported chatbots hallucinating non-existent tax brackets or miscalculating capital gains taxes.
• Outdated Tax Codes: Tax laws change every single year. A general AI model might confidently give advice based on 2023 tax laws that are no longer valid for the 2025/2026 tax season, which can trigger an IRS audit.

Ultimately, while GenAI cannot legally file your return, its ability to replicate premium tax guidance for free is deeply threatening to Intuit's business model. It turns high-margin tax advice into a free commodity, leaving traditional software companies competing solely on who can submit the paperwork the cheapest.