Tax Software versus Paid Preparers: Motivations and Predictors for the Mode of Tax Preparation Assistance

Abstract

In recent years, the number of taxpayers using tax preparation software has increased substantially; however, little is known about how these taxpayers differ from those using a paid professional. We gather data from a sample of taxpayers who used either tax software or a paid professional to examine their motivations for choosing their mode of tax preparation assistance. We find software users rated the importance of preparing the most accurate return significantly lower than the paid professional groups, while they rated the goal of minimizing the cost of preparation significantly higher in importance. We draw upon the Unified Theory of Acceptance and Use of Technology model to examine variables that predict the mode of tax preparation assistance. Results suggest measures representing performance expectancy, effort expectancy, and social influence are significant in distinguishing taxpayers using tax software from those using a paid preparer.