How To Cut Tax Prep Time With AI
Efficiency Without Sacrificing Accuracy
The tax industry is undergoing a major transformation, and AI is at the forefront of this shift. Tax professionals are finding that leveraging artificial intelligence can drastically cut preparation time by automating repetitive administrative tasks and even unlock new advisory opportunities. Firms that leverage tax accounting AI tools can streamline their workflows, boost efficiency, and deliver better services to their clients.
Implementing AI At Your Firm
AI is advancing at an unprecedented rate. Automation in tax prep is no longer just about data entry; it now extends to reviewing returns, identifying potential errors, and even suggesting tax-saving strategies. However, AI is not without its limitations when it comes to tax accounting. Tools like TruePilot can process vast amounts of information quickly, but professional human oversight remains essential to ensure accuracy and compliance. The key to success is understanding how to integrate AI into daily operations without losing the personalized, expert touch that clients deserve and expect.
Establishing a Centralized Data Hub
To maximize efficiency, firms must take a structured approach to data management. A centralized document hub ensures that all client records are stored in one place, making it easy to retrieve work papers, tax returns, and other essential files. Cloud-based platforms enable seamless integration with tax software, ensuring that data flows smoothly between systems. This eliminates unnecessary delays, improves organization, and enhances security—key factors for firms aiming to improve efficiency and compliance.
For example, TruePilot seamlessly integrates with cloud-based storage solutions like SmartVault. With this setup, tax professionals can automatically sync client documents, eliminating the need for manual file transfers. When a client uploads tax documents, AI-powered tools can instantly categorize and validate the information, ensuring tax preparers have real-time access to up-to-date records. This system reduces administrative bottlenecks and improves collaboration across teams by providing a single, structured source of truth for all tax-related data.
By integrating tax software directly into a centralized hub, firms ensure that AI-driven tools can pull relevant data for analysis, projections, and advisory insights. This automation drastically reduces errors caused by fragmented data storage and allows tax professionals to focus on providing high-value services rather than spending time tracking down missing documents.
Automating Administrative Tasks
One of AI’s greatest advantages is its ability to eliminate repetitive administrative tasks. By leveraging AI-powered automation, tax professionals can:
Generate source document checklists based on prior-year returns.
Automate the preparation of client work papers.
Convert tax documents into structured, editable data with AI-powered Optical Character Recognition (OCR).
OCR is a technology that allows AI to extract text and numerical data from scanned documents, PDFs, and images. This means tax professionals no longer need to manually enter data from client documents—AI can read and process data instantly, reducing errors and improving efficiency. TruePilot’s OCR engine reads tax documents and automatically extracts relevant data. Instead of manually keying in information from W-2s, 1099s, and K-1s, TruePilot identifies, categorizes, and inputs this data directly into tax software, ensuring accuracy and saving valuable time.
Reducing time spent on these tasks empowers firms to focus on higher-value activities, such as tax strategy and client advising. This shift not only improves productivity but also leads to a more fulfilling work experience for tax professionals who would rather spend their time solving complex financial problems than manually entering data.
Improving Client Communication and Onboarding
Client expectations are evolving, and firms need to keep up with their demands for faster, more responsive, and personalized service. Automating client onboarding through digital intake forms, automated email follow-ups, and workflow management tools ensures a smoother, more efficient process. By implementing tax accounting AI tools, firms can:
Collect and organize client documents automatically.
Send real-time status updates on tax preparation progress.
Reduce the number of back-and-forth emails by centralizing document exchanges in a secure portal.
These improvements not only enhance the client experience but also help firms scale efficiently without increasing their administrative burden.
TruePilot’s client onboarding system automates document collection and communication. Instead of manually requesting W-2s, 1099s, and K-1s from clients, TruePilot generates a customized document request list based on the client’s prior-year return. The system then sends automated reminders until all required documents are received, ensuring a seamless onboarding experience.
TruePilot also integrates with secure client portals, enabling tax professionals to exchange documents in real-time without needing to send multiple follow-up emails. Clients receive status updates, reducing uncertainty and increasing transparency throughout the tax preparation process. This enhanced communication structure helps firms scale efficiently, providing a higher level of service without increasing administrative workload.
Enhancing Tax Research and Advisory Services
AI is revolutionizing how tax professionals conduct research and offer advisory services. Instead of manually sifting through dense tax codes and regulations, AI can instantly retrieve relevant tax laws, generate summaries, and even highlight opportunities for clients to save money by:
Analyzing year-over-year changes in client returns to identify trends and tax-saving opportunities.
Recommending advisory services based on a client’s financial situation.
Providing quick and reliable answers to common tax-related queries.
Tax account AI tools allow firms to provide faster, more insightful guidance while still maintaining human oversight for final decision-making. Imagine these tools as an AI-driven, supercharged tax research assistant. Instead of spending hours combing through complex tax regulations, tax professionals can ask tools like TruePilot specific tax-related questions and receive accurate, contextually relevant answers in mere seconds. For example, you might ask, “What deductions are available for a client with a home office and rental income?” TruePilot instantly retrieves applicable tax laws and suggests deductions the client may qualify for, streamlining the research process.
TruePilot can also analyze a client’s tax return data and proactively suggest advisory opportunities. If a client’s income has increased significantly from the previous year, TruePilot may recommend discussing tax-efficient investment strategies or contributing to a retirement account to reduce taxable income. By automating these insights, tax pros can shift their focus from manual research to delivering high-value, personalized advisory services.
AI Is Reshaping Tax Firms
Firms that implement AI are already seeing significant benefits. The ability to process tax returns faster means professionals can take on more clients without sacrificing quality of service. As AI continues to evolve, its role in tax preparation will only expand, offering even greater efficiency and accuracy.
Firms using TruePilot have reported a significant reduction in tax prep time by automating document processing and tax research. On average, they save 1.5 hours per return by automating workpaper creation and document organization alone.
“My firm saved an hour and a half per return on these two things: one is creating a workpaper and putting in all the raw data from the source documents, and the second was creating a bookmark single PDF of the source documents.”
Instead of spending hours manually entering client data, AI-powered tools extract and categorize information in minutes, allowing preparers to focus on strategic planning and compliance review. This has helped firms reallocate time towards value-added services, strengthening client relationships and improving workflow efficiency. Clients appreciate real-time updates, proactive tax-saving recommendations, and faster response times, making them more likely to continue working with firms that leverage AI-powered solutions.
Another major impact is financial–firms investing in AI are seeing increased profitability. By reducing manual labor and administrative costs, they can reallocate resources toward business growth and client service. This enables firms to attract new and retain high-value clients by offering a tech-forward, streamlined experience. For example, MSB Accounting, which leverages TruePilot to integrate AI-driven workflows, was able to handle two firm acquisitions in the same tax year without increasing staff, thanks to TruePilot automations.
“MSB started growing through two acquisitions. We made it work thankfully and we got all the corporate returns done...We were able to do that because the clients still kept coming in, so we had to automate the intake.”
This not only boosted revenue but also improved MSB Accounting’s employee satisfaction by eliminating tedious, repetitive tasks. By integrating AI-powered solutions like TruePilot, tax firms are future-proofing their businesses, ensuring they remain competitive in an increasingly digital, fast-paced industry and set themselves up for long-term success.
The Future of AI in Tax Preparation
AI is no longer a futuristic concept—it is actively reshaping the tax industry. Firms that embrace AI-driven automation gain a competitive edge by working smarter, not harder. While AI will never replace the expertise and judgment of tax professionals, it serves as a powerful tool to enhance efficiency, accuracy, and client service. The firms that embrace these technologies will surely thrive in an increasingly digital, fast-paced world.
Want to learn more? Check out our webinar on using AI and automation to cut tax prep time in half here.