Free CFP Exam Tax Planning Practice Questions
Tax planning on the CFP exam tests individual income taxation, tax-advantaged accounts (401(k), IRA, Roth), capital gains strategies, and the interaction of tax planning with retirement, estate, and investment planning (CFP Board).
Sample Questions
Question 1
Easy
Which of the following best describes how OBBBA changed the SALT deduction?
Solution
C is correct.
OBBBA raised the SALT cap from the pre-existing TCJA to per return ( MFS). Above MAGI the cap phases down by per of additional MAGI, with a floor of reached around MAGI.
OBBBA raised the SALT cap from the pre-existing TCJA to per return ( MFS). Above MAGI the cap phases down by per of additional MAGI, with a floor of reached around MAGI.
Question 2
Medium
Which of the following income-shifting strategies is a legitimate tax reduction technique?
Solution
B is correct.
Employing a child in a family business and paying reasonable compensation for actual work performed is a legitimate income-shifting strategy. The wages are deductible by the business and taxable to the child at the child's lower rate. For sole proprietorships, wages paid to a child under age 18 are also exempt from Social Security and Medicare taxes. Legitimate income-shifting strategies must involve actual economic activity and reasonable compensation for services rendered.
Employing a child in a family business and paying reasonable compensation for actual work performed is a legitimate income-shifting strategy. The wages are deductible by the business and taxable to the child at the child's lower rate. For sole proprietorships, wages paid to a child under age 18 are also exempt from Social Security and Medicare taxes. Legitimate income-shifting strategies must involve actual economic activity and reasonable compensation for services rendered.
Question 3
Hard
The Patels file MFJ in 2026 with MAGI of . They paid of SALT. Compute their deductible SALT under OBBBA.
Solution
A is correct.
MAGI excess over is . The phase-down reduction would be .
Unphased cap minus reduction = . However, OBBBA sets a floor of , so the effective cap cannot drop below . The Patels can deduct of their SALT.
MAGI excess over is . The phase-down reduction would be .
Unphased cap minus reduction = . However, OBBBA sets a floor of , so the effective cap cannot drop below . The Patels can deduct of their SALT.