Budget for taxes and your tax return with AI

Using AI for budgeting

Budgeting is a necessity, and if you have a plan in place for managing your money, spending and saving are less stressful. This is especially true if you freelance or are self-employed. Thankfully, generative AI is able to help you create a budget using prompts like these:

• I freelance and have two major clients. Help me come up with a monthly budget that accounts for my guaranteed income and known expenses. Include provisions for additional freelance work I may pick up. Point out anything I may be able to deduct on my taxes when it comes time to file.
• Help me create a monthly budget. My monthly household income is [amount] after taxes. Each month I spend [amount] on things like rent, utilities, groceries, and insurance. Provide suggestions for building an emergency fund and saving for retirement.

As with all AI prompts, the more thorough you are, the better your responses will be. For creating a basic budget, the more details you include about your monthly spending, the more accurate the response you’ll get about a monthly budget and what you can afford to spend and save.

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AI for tax preparation help

If you have a traditional job that gives you a W-2 form to file your taxes, tax season may not cause you a lot of grief. That said, there are still ways to maximize your tax return. Use AI to help you get the most money back when you file your taxes with prompts like:

• What are common deductions and exemptions to know about for when I file my taxes?
• I own an electric car and had the windows on my home replaced. Am I eligible for a tax credit?

However, if you own a business, freelance, or are self-employed, tax preparation may feel like a chore. While you can’t use AI to file your taxes, it may help you get prepared. Try prompts like these to get ready to file your taxes:

• Summarize key takeaways from tax laws for small business owners and freelancers in [state].
• I freelance and have worked with multiple clients throughout the year, primarily in my home office. Create a workflow checklist of the information I need to gather and steps I need to take to file my tax return.
• Analyze the details of this income and expense report to determine if I owe state or federal tax payments, and if so, how much. [attach report]

To avoid potential issues, carefully review calculations or information that AI provides. It’s also a smart idea to consult with an accountant or qualified tax professional for guidance for your specific situation. AI tools assist in understanding taxes, but they don’t take the place of professional tax preparation. AI answers questions and gives information, not reliable tax service.

Budget for taxes with AI

If you’ve already used AI to create a budget and you have tax documents from previous years on hand, estimating how much you might need to save for taxes may be easy. If you anticipate that the current year’s income will be comparable to the previous year’s, take what you paid in taxes last year and divide it by four. This should be your quarterly payment. To add this figure into your current budget, upload your budget document to AI with a prompt like this:

• I need to pay [amount] in taxes every quarter. How much do I need to put aside monthly in order to make these payments? Adjust my monthly budget to account for this additional savings need. [attach budget]

Learn more about your taxes

To deepen your tax knowledge, look for answers with AI. Some prompts you might use include:

• How much should self-employed taxpayers save for taxes?
• I’m self-employed and forgot a quarterly tax payment. Will I be charged a late fee or have to pay interest?
• What is self-employment tax?
• How much should a self-employed taxpayer set aside from a Form 1099-NEC?
• I’ve made [amount] pre-tax as a self-employed worker in [state]. What is my tax rate?
• How do I fill out Form 1040-ES?

Getting a handle on your finances is always a good idea, but it’s an especially good idea around tax season.