The Tax Cuts And Jobs Act’s Effect On Tax Preparation Behavior

Abstract

This thesis intends to study the effects of the Tax Cuts and Jobs Act (TCJA) on tax preparation behavior. The purpose of this study is to determine if changes in TCJA can elicit changes in tax preparation behavior, through manipulating information provided to the participant. In this study, I predicted that providing extensive information on TCJA will induce cognitive overload and cause the user to switch from self-preparation of taxes to firm preparation of taxes. Further, I predicted that providing specific information on a relevant TCJA change to the deductibility of fees paid for tax preparation will cause the user to switch from firm preparation of taxes to self-preparation of taxes. Although the experiment had the potential to demonstrate that changes in tax policy, whether material to user or not, cause significant changes in tax preparation behavior, the results did not yield any evidence of these claims. I attribute this result to the uniqueness and comfort with tax returns of the tested population and further experimentation on the topic is necessary.