Contents
A curated collection of AI prompts drawn from the best practices in tax return scenario analysis. Crafted to help uncover various scenario analysis within your client’s tax situations, these prompts provide a starting point for exploring the possibilities of AI.
Here at Hive Tax AI, we know that prompting in LLM tools is hard. That’s why we’ve made it simple by curating some sample prompts for you.
Sample Scenario #
| Scenario | Desired Output | AI Prompt to Use |
| AMT Tax | Evaluate if the client’s action will trigger AMT tax. | “What if the client takes the following action, would that trigger AMT tax?” |
| Capital Gains or Losses | Evaluate if the client’s action will result in taxable gains or losses. | “What if the client sells [specific asset] with a long-term or short-term gain/loss? How can they minimize taxes?” |
| Charity – AGI Limitations | Evaluate if the client’s donation exceeds AGI limitations. | “What if the client donates [amount]? How do AGI limitations affect their tax deduction in [Year]?” |
| Charity – Donor-Advised Fund | Evaluate if setting up a donor-advised fund benefits the client. | “What if the client establishes a donor-advised fund? What are the tax advantages in [Year]?” |
| Charity – Qualified Charitable Distribution (QCD) | Evaluate if a QCD reduces the client’s taxable income. | “What if the client makes a QCD from their IRA? How does it reduce taxable income in [Year]?” |
| Equity Compensation (NQSOs, ISOs, RSUs) | Evaluate the tax impact of exercising or selling equity compensation. | “What if the client exercises ISOs, NQSOs, or sells RSUs? What are the tax implications in [Year]?” |
| LLC vs. S-Corp | Evaluate if changing entity structure benefits the client. | “What if the client converts their LLC to an S-Corp? What tax benefits would they achieve in [Year]?” |
| Model Different Filing Statuses | Evaluate the tax impact of different filing statuses. | “What if the client files jointly versus separately in [Year]? How does it impact their tax liability?” |
| Qualified Business Income (QBI) | Evaluate if the client can maximize their QBI deduction. | “What if the client adjusts their income or expenses? How can they maximize QBI deduction in [Year]?” |
| Retirement Plans | Evaluate if maximizing contributions benefits the client. | “What if the client maximizes their [specific retirement account] contributions in [Year]? What tax benefits apply?” |
| Roth Conversion | Evaluate if converting to Roth IRA is tax-efficient for the client. | “What if the client converts $[amount] from a traditional IRA to a Roth IRA in [Year]?” |
| Required Minimum Distributions (RMD) | Evaluate if the client’s RMD affects their tax liability. | “What if the client takes their RMD in [Year]? How does it impact their taxable income and overall tax liability?” |
| Section 1250 Gains/Depreciation Recapture | Evaluate the tax impact of depreciation recapture on property sales. | “What if the client sells Section 1250 property with depreciation recapture? How does it affect their taxes?” |
| Rental Property | Evaluate if adjusting expenses or rents impacts tax liability. | “What if the client increases expenses or adjusts rents? What is the tax impact on their rental income in [Year]?” |
| Inheritance and Estate | Evaluate if the client’s gifts or estate plan minimizes taxes. | “What if the client gifts [amount] to heirs? How does it affect estate taxes in [Year]?” |
| Trump Tax and Tariff Plan | Evaluate the percentage change in after-tax income of clients under Trump tax and tariff plan. | “What is the percentage change in after-tax income of a couple clients with a taxable income of $150,000 under Trump’s tax and tariff proposals” |
| TCJA Sunset | Assess the effective tax strategies in anticipation of the TCJA sunset . | “What are the best strategies for the client in anticipation of the TCJA sunset?” |
Original tax return vs. tax projection #
| Generate a table comparing the client’s original tax return with alternative tax scenarios | “Create a table comparing the client’s original tax return with alternative tax scenarios. Include columns for AGI, Taxable Income, Tax, and Effective Tax Rate. “ |
Example Output #
| Scenario | AGI | Taxable Income | Tax | Effective Tax Rate |
| Original Return | $120,000 | $100,000 | $15,000 | 15% |
| Scenario 1: Roth Conversion | $130,000 | $110,000 | $17,500 | 16% |
| Scenario 2: QCD | $115,000 | $95,000 | $14,000 | 14.7% |
Prompting Tip for Scenario Analysis #
After generating a client’s tax return, use targeted prompts to explore various tax scenarios and their implications. Here are some tips to frame effective prompts:
- Be Scenario-Specific: Clearly define the scenario you want to evaluate. For example, “What if the client sells a rental property in 2024 with $50,000 depreciation recapture?”
- Incorporate Client Actions: Focus on actions the client might take, such as making a charitable donation, adjusting business expenses, or converting an IRA to a Roth IRA.
- Set a Clear Objective: Specify what you’re trying to determine, like minimizing tax liability, maximizing deductions, or understanding cash flow impact.
- Provide Necessary Details: Include relevant financial details in your prompt, such as amounts, timelines, or specific assets.
- Account for Timing: Indicate the tax year or future changes like TCJA sunset provisions or RMD timing.
- Ask “What If” Questions: Begin prompts with “What if the client…” to simulate hypothetical scenarios effectively.
Example: #
- “What if the client donates $10,000 to a donor-advised fund in 2024? How will this impact their AGI and itemized deductions?”
- “What if the client exercises 1,000 ISOs at $50 per share in 2024? What is the tax implication?”
By applying these strategies, tax planners can generate actionable insights and plan optimally for their clients.