PAID TAX PREPARER DETERMINANTS EXTENDED AND REEXAMINED

This study uses 1988 Individual Public Use Panel data to extend and re examine the determinants of paid tax preparer use through inclusion of a variable capturing the importance of income-related dollars associa ted with schedules. Results of legit estimation of the reduced-form mo del for paid tax preparer use establish that income-related dollars pe r schedule, as measured by the absolute positive income, are significa nt and positively correlated to the likelihood of using a paid tax pre parer when filing schedules B or E. Estimates reveal that the likeliho od of using professional tar 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 tar rate, measure of dependents, and Schedule A.