Dan Madden, CFP® – Online CFP Program

Estate Tax and Applicable Credit

In 2026, Thomas dies with a taxable estate of $18,000,000. He made no prior taxable gifts. The Basic Exclusion Amount (BEA) in 2026 is $15,000,000 and the applicable credit amount is $5,945,800. What portion of Thomas’s estate will be subject to federal estate tax? $0 $3,000,000 $12,054,200 $18,000,000 CLICK TO REVEAL ANSWER Expand B is…

Double Taxation on Medicare and Social Security?

Course: Income Tax PlanningLesson 7: Arriving at Adjusted Gross Income Student Question: Am I correct that this looks like paying taxes over taxes by first adding the 2.9% for Medicare taxes, and then paying Social Security tax over that? “3. Calculate self-employment tax: Instructor Response: Hi This is a really common point of confusion, so…

Earnings Test Calculation

In 2026, Maria, age 63, begins receiving Social Security retirement benefits. She earns $50,000 from employment during the year. The 2026 earnings limit for individuals under full retirement age is $24,480. Approximately how much of Maria’s Social Security benefits will be withheld due to the earnings test? $0 $12,760 $12,240 $25,520 CLICK TO REVEAL ANSWER Expand…

Irrevocable Non-Grantor Trust Clarification

Course: Estate PlanningLesson 9: Income Taxation of Trusts and Estates Student Question: I wanted to make sure I understand this correctly. Irrevocable non grantor tax is on the trust. If it distributes the income, then the tax is on the beneficiaries. The only case in which an Irrevocable non grantor trust doesn’t distribute the entire income is…

Foreign Tax Credit

A U.S. taxpayer earns income from both U.S. and foreign sources and pays income tax to a foreign government. Which of the following limits the amount of foreign tax credit that may be claimed? The taxpayer’s adjusted gross income The taxpayer’s marginal tax bracket The amount of U.S. tax attributable to foreign-source income The taxpayer’s…

Maximum Family Benefit

Course: Insurance PlanningLesson 10: Social Security Student Question: Does the maximum family benefit apply to a husband and wife that are both fully insured if the combined total between the two exceeds the maximum family limit? If I understand correctly, the maximum family limit only applies if there are beneficiaries within the family receiving benefits…

Roth IRA Contribution Eligibility

In 2026, which of the following taxpayers may make a full Roth IRA contribution, assuming all other eligibility requirements are met? Single filer with MAGI of $270,000 Married filing jointly with MAGI of $255,000 Head of household with MAGI of $130,000 Married filing separately with MAGI of $15,000 CLICK TO REVEAL ANSWER Expand C is…

Interest Rate Risk in a Bond

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What…

Taxable Income

A CFP® professional is reviewing a client’s Form 1040. Which of the following best describes how taxable income is calculated? Total income reduced by tax credits Adjusted gross income reduced by deductions Gross income reduced by exclusions Total income reduced by adjustments and credits CLICK TO REVEAL ANSWER Expand B is the answer. Taxable income =…

Appropriate Emergency Fund

Course: Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: Hi, Why is the answer to review question down below 22,500 (only 3 months of income needed)? I would have thought it would be 45,000 (six months of income needed). I thought six months would be needed since they (1) both did not have…