The United States’ tax system is notoriously difficult to try and figure out, which is why there’s a slew of A.I.-powered options hitting the market to help taxpayers navigate it all. Even so, new data reveals just how confused some taxpayers are about what they can and can’t do to try and reduce their tax liabilities—and for younger Americans, some of the data is a bit alarming.
For instance, nearly one-in-five members of the Gen Z cohort erroneously believe that they can “write off anything as a business expense,” according to data collected by Talker Research on behalf of TurboTax, which surveyed 4,000 Americans who plan to file a tax return this year. It’s unclear where the 17% of Gen-Zers who believe they can “write off anything” got the idea (Seinfeld, perhaps?), but they would need a business in order to claim a business deduction.
Additionally, 20% of Gen Z respondents don’t believe that students need to file a tax return, and another 13% think that they aren’t required to pay taxes if they’re paid in cash—two statistics that are likely to give CPAs around the country agita.
“Filing taxes can feel overwhelming—so much so that 20% of people would rather face Black Friday crowds or go to jury duty,” said Lisa Greene-Lewis, CPA and spokesperson for TurboTax, in a statement included with the survey results.
But it’s not just Gen Z that has some mistaken beliefs around their taxes. Other eyebrow-raising statistics from the data set include the fact that roughly a quarter of millennials and Gen Xers think that immigrants don’t pay taxes, and 27% of Baby Boomer respondents think that they don’ t need to file a tax return and are unable to get a tax refund if they make less than the IRS income requirements.
With a lot of misconceptions and erroneous beliefs around taxes, it’s no wonder that many tax-prep companies are pouring resources into trying to make the process smoother. That includes TurboTax, which, again, was behind this most recent survey data, which has experimented with “AI-powered express lanes” over the past year, and has even made it relatively easy for some taxpayers to file a return on their smartphones.
Other companies have followed suit, or released competing services, too, such as H&R Block, which likewise has a tool called AI Tax Assist to help taxpayers fill out and file their returns. The catch, with most of these services, is that they typically only work for those with relatively simple returns—that is, people with one job or source of income, and no or limited itemized deductions.
Note, too, that the IRS rolled out a free tax-filing service last year called Direct File, which was developed by the IRS in-house and can also help taxpayers file their returns assuming they have simple tax situations.
