How tax professionals can leverage AI to review PDFs

Tax professionals know just how many documents it takes to close out the financial year. While tax pros are well-versed in requesting the documents that help save clients money, their analysts or team members may be less enthusiastic when thousands of PDFs arrive!

Since the seasonal nature of tax time often means working long hours, tax professionals can look forward to the time saving features of AI. While tax professionals may prefer to do the planning, preparation, and oversight of client tax filings by hand, AI tools can handle much of the administrative legwork. The end result is a smoother workflow — or, dare we say, one less ‘taxing’ on the professionals themselves!

AI document processing for tax professionals 

Even basic tax files can generate hundreds of pages of paperwork. Tax professionals are provided client PDFs over the course of the season, and need to record, analyze, and store tax documents such as:

• Invoices and receipts from tracking expenses, payroll, subcontractors, or freelancers
• Receipts for office supplies, equipment, and utilities, including software and subscriptions
• Travel and meal expenses like airfare, hotel stays, rideshare apps or taxi receipts
• Medical expenses for prescriptions, dental bills, or vision care
• Taxes, professional dues, and licenses
• Charitable donations or donations made in kind
• Professional fees paid to accountants or lawyers
• Educational expenses for tuition, textbooks, or interest paid on student loans
• Advertising and marketing expenses on social media ads, print materials, website expenses
• Vehicle or mileage receipts
• Home office expenses
• Union or professional dues
• Interest paid on loans, mortgage interest, or property tax

Each of these documents will not only need to be kept securely on file, but processed to extract relevant information for tax forms.

How AI document processing can save tax professionals time 

Tax professionals might have well established procedures for handling documents, but they often still benefit from AI. With deadlines looming at tax time, there’s plenty of good reasons to speed up the work. Here are some examples of how tax professionals can use AI document review to save time:

Automated data extraction and pre-consultation review

AI document processing tools can summarize, review, and extract key information from PDFs. When AI document processing technology is applied to the submitted PDFs in the client file, the tax professional is able to see, at a glance, some key points they’ll need to keep in mind — before meeting with the client.

Are there any new documents submitted this year and missing for the previous year? Submitted last year and missing this year? Documents related to a new tax credit or one you’ll need to research?

Even if you decide to process all client data by hand, it can still be beneficial to quickly “x-ray” the uploaded files. Using AI, the tax professional can extract data, flag follow up questions, and look at year over year trends — catching any missing documents that could delay filing or new expenses that might be misclassified.

Imagine you have a client who plans to apply the Residential Clean Energy Property Credit to the cost of their solar panels. Document processing tools can flag these expenditures ahead of time, so the tax team has time to review IRS guidance on the credit, review research or whitepapers, and scope out how much the client can receive before your initial meeting. This gives the tax preparer more insight before the meeting starts, offers a better quality service, and saves both parties time. 

Duplicate file detection, expense categorization, and reconciliation within the client file

AI processes tax documents, receipts, and supporting invoices in a fraction of human worker’s time. This allows the tax preparer to quickly pull the data that matters: eliminating duplicate files, categorizing documents by expense type, and reconciling expenses with insurance reports, bank statements, or credit cards.

For example, imagine you file income taxes for a retired executive, Dr. Cindy Consolidation. Cindy is retired and has no T4, but she has a stack of documents related to her investments. The PDFs uploaded to her file come from several sources: online investment accounts, mailed bank statements, and Cindy’s portfolio manager. As a result, many of her documents duplicate the same data. Cindy also has expenses related to her health, and provides your team with hundreds of prescription slips from the pharmacy.

Upon review, the tax team notes that Christine has insurance that covers prescription drugs. Some of Cindy’s prescriptions are covered, but some aren’t eligible under this plan. When she pays out of pocket, Cindy keeps the receipt, but doesn’t submit it to her insurer — creating a messy scenario where it’s unclear how much Cindy paid by herself, and what she was reimbursed for.

Tax professionals are probably familiar with the scenario described, at least enough to know the process could take hours! As it is, AI document review makes it possible to reconcile the prescription drug paid amount in a fraction of the time, as well as sum the data from prescription slips, de-duplicate documents related to Cindy’s investments— all in a matter of minutes. As a bonus, the AI document review tool catches Cindy’s missing T5!

AI helps capture all aspects of the tax file

Not every possible tax item will appear in your client’s folder. Deductions or credits can be overlooked, documents might be missing, or expenses can be difficult to classify. Far from “replacing” the tax professional with AI, leveraging AI document review can simply mean a higher quality file — in a fraction of the time.