Paid Tax Preparer Determinants Extended and Reexamined

Abstract

This study uses 1988 Individual Public Use Panel data to extend and reexamine the Abstract determinants of paid tax preparer use through inclusion of a variable capturing the importance of income-related dollars associated with schedules. Results of logit estimation of the reduced-form model for paid tax preparer use establish that income-related dollars per schedule, as measured by the absolute positive income, are significant and positively correlated to the likelihood of using a paid tax preparer when filing schedules B or E. Estimates reveal that the likelihood of using profes sional tax assistance increases by 4.0% and 1.6% per $10,000 of income-related dollars, respectively, when using Schedule B and Schedule E. Support was found for examining variables measuring dollars in logarithmic form and for controlling for type of 1040 form filed. Results contrary to those of earlier studies were observed for the significance of total positive income, marginal tax rate, measure of depen dents, and Schedule A.