The smart way to use AI to do your taxes
Plus: the truth behind how the ‘G-Wagon write-off’ really works
Published: Feb. 17, 2026 at 9:53 a.m. ET
Here’s how I’m using AI to help prepare my taxes this year — accountant-approved.Photo: MarketWatch photo illustration/iStockphoto, IRS
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Welcome back to Don’t Short Yourself, which is built around a simple goal: to help you make smarter decisions with your money, without the noise and hype that dominate so much financial advice today.
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This week we’re talking about taxes. To get in the filing groove, may I suggest “Taxman” by the Beatles?
Now we’re in the right headspace for me to offer some of my best tax-season tips as you listen to the song’s killer opening bass line. ’Cause I’m the tax (help) man.
— Andrew Keshner
BIG MONEY IDEA OF THE WEEK: The smart way to use AI to help with your taxes
Taxes have existed — and annoyed — for millennia. Then ChatGPT arrived in late 2022, ushering in a new age of artificial intelligence. Now, humankind’s oldest number-crunch ritual is teaming up with the newest, most powerful calculator yet.
Does it sound like the premise of a buddy flick? Undoubtedly. Is it also an opportunity to get tax smart and save money? Quite possibly — if you do it right.
I’m not saying unleash AI on your taxes and hope the IRS shrugs.
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Instead, think of options like ChatGPT, Google’s
Gemini and Perplexity as guides to explain tax rules and get you organized. Then you can feel informed and prepared when you turn to your tax software or accountant — who is likely also using AI tools.
So this week I submit to you three tips and a warning:
Tip No. 1: Prep
I talked to Victor Kapella, a ChatGPT and Perplexity power user. He uses AI to learn about the records and the tax forms he’ll need — which he says may have saved him thousands by skipping tax-prep fees and finding money-saving strategies for a particularly complicated set of taxes this year.
His advice: Be very specific: “Just imagine you have the smartest intern you ever had working for you, but they are very naive.”
Also: Check the sourcing. Hannah Cole, author of “Taxes for Humans,” calls herself “AI-cautious.” Prompts can yield slop, she says, because the models are trained on human-made junk already on the web — and there’s plenty of that in tax land. “I find if it directs you to the IRS, that’s trustworthy,” she says.
In short, include instructions in your prompt to have AI show you source material or verify facts.
Tip No. 2: List it
Staying organized = better tax returns. More forms and records gathered sooner means fewer terse emails from your grouchy accountant — and less time waiting for your refund.
I do my own taxes, so I’m my own grouchy accountant, barking at myself to unearth various forms. And I’ve always done back-of-the envelope planning. Literally. Last month, I scribbled every form I’d need for my return on the envelope of the first 2025 income-tax form I received:W-2s, receipts, broker statements, etc. …
“Mentally, I go through the same stupid checklist,” Bradley Gustafson tells me.
Here’s his pro tip. The Indianapolis consultant, who helps construction and manufacturing firms use AI, feeds his AI tool a detailed prompt about his household’s income streams and asks it to compile a personalized document checklist.
I tried it: “Dual-income wage earner with kids, house and index funds (who likes long walks on the beach), seeks a checklist on all tax information and records needed to prepare 2025 tax returns.”
Honestly, it did a nice job. Goodbye, envelope.
Tip No. 3: ‘Sketch it’
When Caroleen Wilkes first launched her commercial real-estate consulting business, she wasn’t ready to pay for an accountant. So for two quarters she used ChatGPT to help her estimate what she owed the IRS.
She started by asking AI to explain topics like self-employment tax and estimated payments, then she asked it to apply those rules to her situation.
This is not a long-term strategy for her.
“It was just a good way to conceptually understand and get started,” she says. “Now I can have a much more educated conversation, and ask the right questions” when working with an accountant.
Here’s how that relates to my tax refund: I love the windfall, but my inner grouchy accountant knows it’s just my money returning with 0% APY. I hesitate to adjust my withholdings because I’m worried about owing the IRS. So this year, I’ll use AI to study the withholding rules, apply some of my numbers and see what I get.
If my smart, naive, IRS-citing intern convinces me, I’ll adjust my withholdings. But if I end up with a nasty tax bill next year, that intern’s fired.
A warning
There are plenty of wrong ways to employ AI for taxes.
The biggest no-no: Uploading documents with personal information into a publicly available AI tool. And, don’t believe everything it tells you: AI slop won’t be a winning excuse for tax mistakes with the IRS.
No matter how you do your taxes, entrepreneurs and wage workers alike “are responsible for every number on that tax return,” says Keith Hall, the president and CEO of National Association for the Self-Employed.
Before you submit your taxes, ask yourself: Does it make sense?
JOIN THE DON’T SHORT YOURSELF LIVE Q&A
Tax season stressing you out? We’ve got you. Join Don’t Short Yourself Live to ask MarketWatch’s Andrew Keshner and Beth Pinsker your tax questions on Wednesday, Feb. 25, at 1:30 p.m. Eastern time.
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MYTHBUSTER: ‘G-Wagon write-off’
“G-Wagon write-off” swirls around social media every tax season. The idea: write off at least a portion of the cost of the boxy luxury vehicle, which can retail for nearly $200,000.
But not so fast.
Sure, between first-year expensing and generous deduction rules for major business purchases, there are ways to deduct the cost of the Mercedes-Benz G-Class, colloquially referred to as the G-Wagon or G-Wagen, an abbreviated version of its German-language name. For this year, in fact, $32,000 of the cost could be written off one way, with the remainder deducted another way.
But there are some catches, as Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting, explains. So buckle up.
The tax break isn’t for wage workers; it’s for the self-employed and business owners. That’s because the relevant rules are rooted in tax incentives for industrial-grade-machinery purchases. The SUV must be used more than 50% for business, and commuting doesn’t count. It must also qualify as “heavy” (weighing between 6,001 and 14,000 pounds).
And document everything.
If the IRS determines it wasn’t a legitimate business property, the deduction can be disallowed. In some cases, the IRS can add the amount back to your taxable income, lifting your total income and resulting in an even bigger tax bill — possibly with penalties. Ouch!
I’m good with my minivan.
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About the Author
Andrew Keshner is a personal finance reporter for MarketWatch who covers taxes, debt, insurance, jobs, consumers and more. He previously worked for the New York Daily News, the New York Law Journal and The Southampton Press. You can follow him on X and LinkedIn.
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