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Can an AI agent do tax preparation?
Yes, for the preparation work, and no, for the signature. An AI agent for tax preparation can organize a client's documents, extract the numbers, populate a draft return from the source documents and last year's return, and flag what looks wrong. Thomson Reuters says its Ready to Review agents have been generally available in the United States for 1040 returns since December 15, 2025, and that the output is "a fully populated tax return, ready for the professional's final review and e-filing." Byron describes its tax-preparation agents, says CPA teams use them, and says reviewers approve every line through approval gates.
What the agent cannot take is responsibility. Anyone paid to prepare federal returns must have a PTIN, federal rules require the individual signing tax return preparer to sign the return, and the IRS says that although the preparer always signs, the taxpayer is "ultimately accountable for the accuracy of every item reported." So treat this as a supervised hire: the agent does the data work, and a preparer reviews, decides and signs.
This page covers preparing returns. For the books that feed them see bookkeeping and reconciliation, and for closing the year's accounts see month-end close.
What the agent does and what stays with you
Agent
- Collect and organize client source documents
Agent with review
- Extract data from W-2s, 1099s, K-1s and other source documents
- Populate the current-year return using the prior-year return
- Build workpapers and prior-year comparisons
Agent
- Flag outliers and missing items for the preparer
Agent with review
- Draft requests to the client for missing documents
Human
- Decide tax positions, elections, deductions and credits
- Review the whole return and sign it as preparer
- Get the taxpayer's review and signature authorization
- E-file the return
- Answer client questions and give tax planning advice
11 tasks: 2 agent, 4 agent with review, 5 human
| Task | Who does it | Why |
|---|---|---|
| Collect and organize client source documents | Agent | Byron says its agent organizes client files into a binder and flags what needs attention, and the result is easy for a reviewer to check against the uploads. |
| Extract data from W-2s, 1099s, K-1s and other source documents | Agent with review | Thomson Reuters and Byron both describe agents extracting document data, and both send the output to a professional for review. |
| Populate the current-year return using the prior-year return | Agent with review | Thomson Reuters says its agents populate the current-year return from source documents and the prior-year return; the professional reviews before filing. |
| Build workpapers and prior-year comparisons | Agent with review | Byron says its agent builds workpapers with source links and a prior-year comparison for the reviewer. |
| Flag outliers and missing items for the preparer | Agent | Thomson Reuters says its AI flags outliers for the tax professional to review; a flag changes nothing on the return by itself. |
| Draft requests to the client for missing documents | Agent with review | Byron lists building PBC (provided-by-client) request lists among its uses; a person should approve anything sent to a client. |
| Decide tax positions, elections, deductions and credits | Human | Applying the tax law to the facts is the judgment the regulation's examples tie to the preparer primarily responsible for the return, and no source documents an agent making these calls without review. |
| Review the whole return and sign it as preparer | Human | 26 CFR 1.6695-1(b) requires the individual signing tax return preparer to sign the return, with a penalty for failing to do so. |
| Get the taxpayer's review and signature authorization | Human | For e-filed returns the signing preparer must give the taxpayer the return information with Form 8879 or a similar e-file signature form. |
| E-file the return | Human | Thomson Reuters places e-filing after the professional's final review, not with the agent. |
| Answer client questions and give tax planning advice | Human | This is an O*NET task for tax preparers, and no source cited here documents an agent doing it for clients. |
The split follows the law and the vendors' own designs. Thomson Reuters describes a five-step flow: the professional uploads documents, agents extract and populate the return, the tax software processes it, the AI flags outliers, and the professional reviews and e-files. Byron says reviewers "approve it, with source links, confidence scores, approval gates, and audit trails." Neither describes an agent filing on its own.
The judgment work stays human. The O*NET task list for tax preparers includes using "all appropriate adjustments, deductions, and credits" and interviewing clients for more information. Those are decisions about how the law applies to the client's facts. The regulation on preparer signatures, 26 CFR 1.6695-1, illustrates that the individual who makes the final determination on applying the tax law is the one primarily responsible for the return's overall accuracy and must sign it. Its examples show computer services doing the computations while a person reviews and signs, which is the same arrangement an agent fits into.
Volume claims come from vendors. Byron reports 99%+ accuracy on standard forms and 97%+ on complex K-1s, and more than 100 hours saved per month across active workflows. Thomson Reuters quotes a partner at CLH CPAs & Consultants, an early adopter, describing a reduction of "approximately an hour on each simple 1040." Treat these as the vendors' figures, not as benchmarks.
A worked example: one return
This is an illustration, not a customer story. Assume, for this example, that the client is a salaried employee with one W-2, a brokerage 1099 and a mortgage interest statement, and that the firm prepared last year's return.
The client uploads three PDFs. The agent files them in the client's binder, extracts wages and withholding from the W-2, dividends and capital gains from the 1099, and mortgage interest from the 1098. It populates the draft return, carrying forward the filing status, dependents and a capital loss carryover from last year. Its comparison shows dividends up sharply from last year and no state tax refund form this year, although last year's return showed a state refund, so it flags both.
The preparer opens the draft and the flag list. Each value links to the line of the PDF it came from. The preparer confirms the dividend increase against the 1099, asks the client whether they received a state refund, and decides between itemizing and the standard deduction. Once the client answers, the preparer finishes the return, signs it with their PTIN, and sends it to the client with Form 8879. The client reviews and signs, and only then does the preparer e-file. The agent never signs, files or contacts the client.
What you need to provide
The agent touches the most sensitive personal and financial data a business holds. The IRS describes preparers as knowing about clients' "marriage, your income, your children and your social security numbers." Give the agent the least access that gets the work done:
- Client source documents and prior-year returns for the clients in scope, through your document system.
- A user in your tax software that can populate drafts but cannot e-file or sign.
- Your review checklist and standing instructions for each client.
- A written list of return types in scope. Thomson Reuters says Ready to Review handles 1040 returns and automates W-2 income and prior-year returns, with a list of source documents set to expand throughout Q1 2026; check what your tool covers before you send it a return.
Two federal obligations apply to the data. Section 7216 of the Internal Revenue Code makes it a misdemeanor for a preparer to knowingly or recklessly disclose return information, or use it for anything other than preparing returns, except as the statute and its regulations allow; the IRS publishes the consent rules in its section 7216 information center. And the IRS says tax professionals are required by law to have a Written Information Security Plan, including contracting with service providers that maintain safeguards for customer information. Ask counsel which obligations apply to your role and setup with the agent's provider.
Job brief template
Use this as the brief for a vendor, an operator or your own team setting up the agent. Replace the bracketed values with your own.
Copy-ready brief
- Goal
- Every individual return in scope has a fully populated draft, with workpapers and a list of flagged items, ready for preparer review within two business days of the client's documents being complete.
- Deliverable
- A draft return in the tax software for each client, linked workpapers showing where each value came from, and a flag list of outliers, missing documents and open questions, assigned to the reviewing preparer.
- Inputs
- Client source documents (W-2, 1099, 1098, K-1 and similar) uploaded to the firm's document system
- Prior-year returns for each client in scope
- A user role in the tax software that can populate draft returns but cannot e-file or sign
- The firm's review checklist and any standing client instructions (for example, carryforwards or state residency)
- A list of return types in scope and out of scope
- Acceptance criteria
- On a sample of 20 returns, every amount entered from a source document matches that document, with at most 2 errors in total.
- Every value in the draft links to a source document or to the prior-year return.
- Every year-over-year change above the firm's threshold (for example $1,000 or 10%) appears on the flag list.
- No return is e-filed, signed or sent to a client by the agent.
- Returns outside the agreed scope are routed to a preparer, not drafted.
- Systems
- professional tax preparation software
- client document portal or file storage
- practice management or workflow system for assigning reviews
- Constraints
- Documents contain Social Security numbers, income and bank details; access is limited to clients in scope.
- Use and disclosure of tax return information is restricted for preparers under section 7216 and its regulations; ask counsel whether your setup with the agent's provider needs client consent.
- The provider is covered by the firm's Written Information Security Plan, which the IRS says tax professionals are required by law to have.
- The agent's account cannot e-file, sign or change client records outside the draft return.
- Volume
- Example: 50–500 individual returns a season
- Cadence
- Example: daily during filing season, as client document sets are completed
- Human checkpoints
- Tax positions and judgment calls: a preparer decides every flagged item.
- Final review and signature: the signing preparer reviews the whole return and signs it with their PTIN.
- Taxpayer authorization: the client reviews the return and signs Form 8879 or the paper return.
- Filing: a person transmits the return after both signatures.
Keep the acceptance criteria. A 20-return sample checked against source documents tells you more than any accuracy figure on a vendor page. Neither vendor cited here publishes a price, so ask any vendor for its price per return and measure review minutes per return in your trial.
Risks and human checkpoints
A value is misread or put on the wrong line, such as a 1099-DIV amount entered as interest, and the return understates or overstates income.
How you notice it
Check a sample of drafted values against source documents each week, and use the workpaper source links on every flagged line.
A document the client sent is missed, so income is left off the return.
How you notice it
Compare the count of uploaded documents with the documents the workpapers cite, and compare income sources with last year's return.
A return outside the agent's documented scope is drafted anyway; Thomson Reuters lists W-2 income and prior-year returns as the starting document types, expanding over time.
How you notice it
Keep a written scope list and have the reviewer confirm each draft's return type and forms before review starts.
Client tax information is disclosed or used beyond what section 7216 and the firm's WISP allow.
How you notice it
Review the provider's data terms and security attestations before the trial, and record the provider in your WISP.
Reviewers start approving drafts without real review because the drafts look complete.
How you notice it
Track review time and corrections per return; a reviewer who never corrects anything needs a spot check of their reviews.
Human checkpoints
- Tax positions and judgment calls: a preparer decides every flagged item.
- Final review and signature: the signing preparer reviews the whole return and signs it with their PTIN.
- Taxpayer authorization: the client reviews the return and signs Form 8879 or the paper return.
- Filing: a person transmits the return after both signatures.
Misreads and missed documents are the quiet risks. A draft that looks complete invites a quick review, and the signing preparer is the one answerable for it. The IRS advises taxpayers to "always check your return for errors," and a firm should hold its agent's drafts to the same standard. Source links on every value make that review fast; skipping it makes the agent a liability.
How to run a trial
Run the agent beside your normal process before you rely on it. Our recommendation is to start outside filing season with a set of already-filed returns, so you can compare the agent's drafts with returns a preparer completed.
- Pick 20–30 already-filed returns of the type the tool supports, ideally simple 1040s with W-2s and a few 1099s.
- Give the agent the same source documents and prior-year returns your preparers had, with draft-only permissions.
- Compare every drafted value with the filed return. Count errors against the brief's acceptance criteria.
- Check the flag list: did it catch the year-over-year changes your preparers noticed? A missed change matters more than ten false alarms.
- Time the review. Review minutes per return, compared with your current preparation time, is the number that decides whether the agent helps.
- Confirm the agent cannot e-file or sign, and that the provider is in your WISP before any live client data goes in.
Pick 20–30 already-filed returns
Of the type the tool supports, ideally simple 1040s with W-2s and a few 1099s
Give the agent the same source documents and prior-year returns your preparers had
With draft-only permissions
Compare every drafted value with the filed return
Count errors against the brief's acceptance criteria
Check the flag list
Did it catch the year-over-year changes your preparers noticed? A missed change matters more than ten false alarms
Time the review
Review minutes per return, compared with your current preparation time
Confirm the agent cannot e-file or sign
And that the provider is in your WISP before any live client data goes in
If the drafts meet the criteria, start live returns with full preparer review on every one. For more on structuring the test, see how to run a paid trial with an AI agent and how to hire an AI agent. Related finance work: financial research and the finance overview.
This page is not financial, tax or accounting advice.
Sources
- AI tax return preparation: How Ready to Review transforms the workflow
Thomson ReutersVendorAccessed Nov 14, 2026
- Transforming Busy Season: Introducing Ready to Review, Thomson Reuters Agentic AI for 1040 Preparation
Thomson ReutersVendorAccessed Nov 14, 2026
- Byron: AI Tax Preparation for CPA Firms
ByronVendorAccessed Nov 14, 2026
- 13-2082.00 - Tax Preparers
O*NET OnLine (U.S. Department of Labor)PrimaryAccessed Nov 14, 2026
- Topic no. 254, How to choose a tax return preparer
Internal Revenue ServicePrimaryAccessed Nov 14, 2026
- Choosing a tax professional
Internal Revenue ServicePrimaryAccessed Nov 14, 2026
- PTIN requirements for tax return preparers
Internal Revenue ServicePrimaryAccessed Nov 14, 2026
- 26 CFR 1.6695-1, Other assessable penalties with respect to the preparation of tax returns for other persons
eCFR (Office of the Federal Register)PrimaryAccessed Nov 14, 2026
- 26 CFR § 1.6695-1 (LII mirror)
Legal Information Institute, Cornell Law SchoolPrimaryAccessed Nov 14, 2026
- 26 U.S. Code § 7216 - Disclosure or use of information by preparers of returns (LII mirror)
Legal Information Institute, Cornell Law SchoolPrimaryAccessed Nov 14, 2026
- Section 7216 information center
Internal Revenue ServicePrimaryAccessed Nov 14, 2026
- Written Information Security Plans are essential for tax pros (Tax Tip 2026-49)
Internal Revenue ServicePrimaryAccessed Nov 14, 2026
What we could not verify
- Accuracy and time-saving figures (Byron's 99%+ on standard forms and 97%+ on complex K-1s, CLH's roughly one hour saved per simple 1040) are vendor-reported or customer quotes published by the vendor; no independent study of agent accuracy on tax returns was found.
- Neither Thomson Reuters Ready to Review nor Byron publishes prices on the pages read (both offer a demo), so the page has no agent cost range and omits the cost comparison.
- Byron's page states 'No 7216 consent required'. That is the vendor's statement; whether consent is needed for a given setup was not checked and is a question for the preparer's counsel.
- Byron's press release on Business Wire (May 2026) returned HTTP 403 and was not read; only Byron's own website is cited.
- No public incident report was found of an AI agent causing an incorrect filed return; the error risks are inferred from the vendors' own review steps and IRS guidance on preparer responsibility.
Related
- AI agents for finance: jobs they do and how to hire one
- AI agent for bookkeeping and bank reconciliation
- AI agent for month-end close: what it does and needs
- AI agent for financial research: what it does and needs
- How to hire an AI agent: scope, brief, trial, supervision
- How to test an AI agent before buying: run a paid trial