How IBM’s Watson Can Help Cut Your Tax Bill
For now, Watson doesn’t appear to be a big moneymaker for IBM. But investors seem impressed with its potential.
Computers have helped people wade through their tax returns for decades. Preparers at H&R Block this season will get some help, too. But a computer won’t just crunch the numbers. Rather, it will probe your return and ask questions along the way--trying to make sure you don’t pay a penny more than necessary to Uncle Sam. H&R Block has “hired” IBM’s Watson--a powerful artificial intelligence system--to act as a cyberguide in preparing taxes.
To study for the job, Watson digested the federal tax code (more than 74,000 pages) and absorbed thousands of conversations between H&R Block’s tax preparers and clients. Its objective is to analyze conversational patterns to determine whether taxpayers may be missing opportunities for savings. Now, when a tax preparer and client go through the paperwork, Watson can follow along, and the system will issue prompts on computer screens if it detects a potential deduction or credit they may be missing. “Watson will ask questions that we might not think about on our own,” says Ed Harbour, a vice president at IBM.
With H&R Block expecting Watson to assist with processing 11 million returns this year, the system should get smarter as it absorbs more data and conversational patterns, making it a more useful tool, says Harbour. For example, IBM says the system should eventually provide taxpayers with “increasingly personalized tips” to help lower their tax bills in the future.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Watson isn’t the only AI technology playing a greater role in our lives. If you use Facebook, Google or Amazon.com, for instance, AI is behind the scenes, guiding you through the site. Meanwhile, Watson is expanding into scientific research, robotics and other fields, and IBM hopes it will push to the forefront of several major technology trends, such as the Internet of Things, cloud computing and personalized medicine. (For more companies cashing in on these trends, see 13 Stocks for the Tech Revolution.)
For now, Watson doesn’t appear to be a big moneymaker for IBM. But investors seem impressed with its potential, seeing it as a way for IBM to reverse a long period of falling sales and profits. IBM’s stock (symbol IBM) returned 25% in 2016, after three straight years of declines. One shareholder who should be pleased: Warren Buffett, whose Berkshire Hathaway owns an 8.5% stake in Big Blue, worth $14.2 billion.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
-
Is a Phased Retirement Right for You?
Want to keep working, just not as hard? A phased retirement may just be the answer.
By Kimberly Lankford Published
-
Four Tips to Make Your Sales Presentation a Winner
Being prepared and not being boring can go a long way toward persuading a potential customer to buy into what you’re offering.
By H. Dennis Beaver, Esq. Published
-
All AI Regulations Are Not Created Equal: Kiplinger Economic Forecasts
Economic Forecasts As Congress regulates artificial intelligence, tech advocates urge lawmakers to define different areas of AI, as some are more dangerous than others.
By John Miley Published
-
Best Banks for High-Net-Worth Clients
wealth management Kiplinger's 2023 list of the best banks for higher-net-worth clients.
By Lisa Gerstner Published
-
Text-Generating AI Faces Major Legal Risks: Kiplinger Economic Forecasts
Economic Forecasts Major legal risks to text-generating artificial intelligence: Kiplinger Economic Forecasts
By John Miley Published
-
Stock Market Holidays in 2024: NYSE, NASDAQ and Wall Street Holidays
Markets When are the stock market holidays? Take a look at which days the NYSE, Nasdaq and bond markets are off in 2024.
By Kyle Woodley Last updated
-
Stock Market Trading Hours: What Time Is the Stock Market Open Today?
Markets When does the market open? It's true the stock market does have regular hours, but trading doesn't necessarily stop when the major exchanges close.
By Michael DeSenne Last updated
-
Bogleheads Stay the Course
Bears and market volatility don’t scare these die-hard Vanguard investors.
By Kim Clark Published
-
I-Bond Rate Is 5.27% for Next Six Months
Investing for Income I-Bonds issued November 1, 2023 through April 30, 2024 will have a rate of 5.27%.
By David Muhlbaum Last updated
-
What Are I-Bonds?
savings bonds Inflation has made Series I savings bonds enormously popular with risk-averse investors. So how do they work?
By Lisa Gerstner Last updated