The advancement of AI is crucial in pushing the boundaries of what’s possible in an increasingly complicated technological landscape. At the same time, explanation and human context is what gives sophisticated computations, based on finite data, real meaning.
Filing tax returns with services like TurboTax is a great example of where personalized explanation is critical. There are over 80,000 pages of U.S. tax requirements and instructions, which are intrinsically correlated and intertwined based on the tax filer’s unique financial situation. Providing an accurate, contextual, and layman-friendly experience tailored to each tax filer is paramount in boosting confidence in their filing capability.
For example, behind Earned Income Tax Credit (EITC) – one of the most important tax credits for a lot of households – is logic and computation to decide whether tax filers can or cannot get this credit, or how much they do get, involves a consideration of multiple factors like filing status, total income, family size, and investment income. In turn, each of them depends on other factors, such as how many tax qualified dependent children can impact the family size. Without effectively reflecting and explaining why and how this credit is decided, it can cause a lot of fear, uncertainty, and doubt – especially when the tax filer was expecting to receive EITC but didn’t, or the amount was smaller than she anticipated.
This all addresses a common core issue in any traditional tax preparation software: a lack of confidence in filing capability. Lack of confidence has been consistently ranked the #1 cause of customer defection. Explanations had never been truly solved systematically in traditional tax filing software. Because of the countless variants of the tax filer’s financial situation and the complicated intercorrelation among tax concepts, these explanations were often inaccurate, too general, too shallow, and very costly to provide.
The next generation tax engine of Intuit – named TKE (Tax Knowledge Engine) – is a breakthrough in the tax preparation software industry. With a knowledge-centric approach, TKE is designed specifically to support large-scale Q&A systems using advanced AI algorithms and knowledge representations underneath. In TKE, a software oracle equipped with tax knowledge intelligently suggests what questions to ask, based on any partial user financial profile. Moreover, explanation capability is built-in such that the engine can explain back the computations at any moment, for any tax concept involved.
To summarize, TKE is able to tell what’s missing and what’s wrong, and explain back at any moment during the DIY tax filing experience.
TKE can also generate progressive explanations that are logically related. This is based on the revelation that for explanations to be effective, they need to be modeled as an incremental and interactive discourse between the user and the system, because the answers provided in the explanation may trigger additional questions from the user. By allowing the user to “drill down” as long as the tax logic and computation allows, the explanation process becomes more effective. This capability is reflected in the unique feature called ExplainWhy in TurboTax Online, where the user can drill in as much as they want to learn more about their filing situation.
TurboTax’s ExplainWhy gives you personalized, bite-sized explanations of the “why” behind your tax deductions, credits and tax refund, so you can be confident you are getting every dollar you deserve.
This past tax season, we estimate we’ve saved millions of tax preparation hours for our users through implementing AI powered features like ExplainWhy; over 16M customers have used it, and 77% of customers said ExplainWhy was helpful as they filed taxes.
So what’s next? We are working aggressively to extend the coverage of ExplainWhy, as well as other innovations to reflect the power of personalized explanation. We believe the powerful AI behind Intuit’s Tax Knowledge Engine ensures our customers receive the absolute highest level of guidance possible, helping them feel confident and supported throughout the tax filing process.