Exclusive: H&R Block has new AI tool to lure TurboTax customers

As tax day approaches, the war of the tax-filing services is heating up, and now AI is getting involved. H&R Block, the number two player in the DIY tax filing software market, says it will use new AI technology to lure customers away from TurboTax, the most widely used company.

Specifically, for all customers who make the switch from TurboTax, H&R Block’s AI tech will scan last year’s TurboTax return, discover any refund opportunities that were missed, then offer to help the customer file an amended 2021 return, H&R Block CEO Jeff Jones says. Customers switching from TurboTax would likely upload their 2021 TurboTax return anyway, since it’s needed to pre-populate fields in their 2022 return. 

The AI review is free. It happens in the background after the filer uploads their 2021 return (which they filed using TurboTax) to the H&R Block system. If the H&R Block AI finds errors that resulting in the filer missing out on more than $250 in refund money, the filer can then decide to pay H&R Block $99 to file an ammended return.

Jones says the secret sauce of the AI model is all the tax filing experience and expertise the company was able to pour into it as training data. “The benefit of being in this business this long is we’ve got millions and millions and millions of returns that we can train the model to look for these discrepancies,” he says.

The AI tool is a way of putting all that experience toward beating a rival. “In this application we have a very holistic program this year to competitively go after the about 10 million TurboTax users that leave TurboTax every year,” Jones says.

TurboTax, for its part, says it’s also leveraging AI to help filers this year, albeit in a different way. The market leader offers an intelligent assistant that delivers personalized and contextually relevant filing advice (based on a large knowledge base containing current rules, instructions, and tax law information) as filers go through the filing process.

H&R Block has long offered a service called “Second Look” at its retail locations that looks for missed refund opportunities in up to three years of past returns. “Over the last few years, as we’ve been applying different AI and ML models broadly across the business this idea emerged about how we automate Second Look for DIY filers,” Jones says. 

H&R Block says that using the initial versions of the new AI model, it has already identified “millions” in missed refunds.

The company will initiate an ad campaign in February, including on TikTok, to spread the word about the new AI tool.

For consumers, holding onto their money (and not handing it over to the government) is especially important as the clouds of recession gather. “Every dollar matters–this is a high stakes event for the client,” Jones says. “In most cases, that refund is already spent. Through that backdrop of the customer, we believe that this application of AI is incredibly helpful.”