By Ryan Ermey, CNBC
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For most of my adult life, I’ve enjoyed a relatively straightforward tax situation. In most years, I merely made sure the income from my W-2 was correct and clicked through my preferred tax software’s questions to the end. No dependents, no side hustle income, no property in my name.
This past year was a little different. After years of buying stock through my company’s employee stock purchase plan, I sold the majority of my shares to begin raising funds for my upcoming wedding.
There are some relatively tricky rules around selling these shares, but the gist is, these plans allow employees to buy stock at a discount to the actual share price. So determining how much money you made (in which case you owe capital gains tax) or lost on the sale of your shares requires some calculations.
So I did what about 1 in 5 taxpayers are doing these days, per a recent survey from IPX 1031: I asked AI for help.
I did so skeptically. I’d seen enough stories about AI “hallucinations” — the industry term for when chatbots get things wrong — that I was half-expecting ChatGPT to make a mess of my taxes. Plus, it had only been three years since I’d put AI to the test on tax strategies and watched it flounder. It’s also worth noting that OpenAI’s usage policies caution against using its product to automate “high-stakes decisions in sensitive areas without human review.”
And yet, when I started chatting with the latest version of OpenAI’s large language model, I could feel my hesitation melting away. It not only answered my first question about how ESPP sales are taxed, but also broke things down into digestible bullet points and asked me if I was comfortable sharing more information.
Since I was using a corporate version of the software that does not use data to train OpenAI’s models, I uploaded the consolidated 1099 form from my brokerage firm.
“This is great — [your brokerage] actually gave us everything we need,” the bot told me. “Here’s what’s going on.”
What ChatGPT told me essentially boils down to: Your brokerage is using one number, which is being uploaded into your tax software. But you actually have to use a different number. I just had to check my last few W-2s to see that they included a certain line item.