Audit Finding
OpenIncorrect jurisdiction
TurboTax AI
Multi-State Module -- Residency -- Incorrect jurisdiction
The Claim
TurboTax's AI chatbot (Intuit Assist), when asked where a college student attending school out of state should file taxes, responded with completely irrelevant information about credits, extensions, and full-time student status rather than answering the state residency filing question.The Error
TurboTax's Intuit Assist failed to address the core question of state tax filing jurisdiction for a college student living away from home, instead returning off-topic resources. Under most state tax residency rules, a college student domiciled in their home state (e.g., California) generally retains that domicile while attending school in another state and owes taxes only where income is earned — not an automatic dual-state filing obligation. The AI's non-answer left users without actionable guidance on a moderately complex but well-settled state residency question, a failure confirmed by tax professionals reviewing the test.
The Citation
Cal. Rev. & Tax. Code §17014 (California resident definition); Cal. Rev. & Tax. Code §17041 (taxation of residents and nonresidents); Cal. Rev. & Tax. Code §18001 (other state tax credit); A.R.S. §43-1091 (Arizona nonresident income tax); FTB Publication 1031; Arizona Publication 704
Business Impact
A self-employed owner or sole proprietor who relies on TurboTax's AI for state filing guidance may file in the wrong jurisdiction, miss required state returns, or incur unnecessary double-filing costs, penalties, and interest under state law.
Verdict
KKATC Tax Response
Note
Sourced from reddit candidate: https://www.inc.com/kit-eaton/your-business-should-not-rely-on-ai-powered-advice-from-turbo-tax.htmlKKATC Tax Prep and Consulting
This scenario is covered.
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