The Tax Cuts and Jobs Act (TCJA) brought many tax changes for high-net worth taxpayers who, as 2018 begins winding down, may have a lot of questions.

“Our clients are absolutely asking about the new tax rule and, when they aren’t, we’re bringing it up to them,” said Susan Mitcheltree, CFP and principal at Berman McAleer in Timonium, Md. “Most understand that rates have come down and that the standard deduction limit has increased.”

“Some want to know details, but others are just interested in a good-news-or-bad-news answer,” said Mike Crabtree, J.D./CPA and partner with the Boulay in Minneapolis. “Clients operating businesses tend to be more interested in the particular provisions. We don’t get as many questions about it from our clients who are retired. Some of our clients with high salaries are going to pay more tax under the TCJA, and they’re not particularly happy about it.”

“One of the biggest sources of concern I’m seeing is basic: Those who have high income from wages are concerned about being severely over- or under-withheld,” said Ann Etter, CPA/CFP with Goodney & Associates in Northfield, Minn. “The nice cumulative effect of the tax brackets also can have a cumulative effect on a now-erroneous Form W-4.”

A significant challenge with the TCJA was the breadth of changes. Said Mitcheltree, “The increase to the standard deduction has been a net positive for many but the loss of personal exemptions wiped out that gain for some. Schedule A has been radically changed. The cap on real estate taxes and SALT (state and local income tax) … is a significant hit to clients in high-income and property tax states. On the upside, the TCJA all but eliminated the alternative minimum tax for taxpayers. Understandably,” she added, “it’s confusing.”

“Every class is affected differently, with many winners and more than a few losers,” added John Lieberman, a CPA at Perelson Weiner in New York. “High-net worth clients that also draw large salaries in high-taxed states are most dramatically affected. Those in real estate and certain other areas are still looking through the recent IRS pronouncements to see what will be the best course.”

“The biggest trap is the false sense of security suffered by many from the increased federal estate and gift tax exemptions,” said Martin Abo, CPA at Abo and Company and Abo Cipolla Financial Forensics in Mount Laurel, N.J. “With all the media attention, [wealthy clients] may feel seasoned, but it will reveal itself truly in paper in front of them at year-end planning meetings or when they see 2018 tax returns.”

Among changes that might impact wealthy clients, according to Abo: the still-healthy tax benefits of charitable contributions and bunching charitable donations; the remaining costs of donating even after tax savings; state-level estate taxes; and repeal of the Pease Limitation that capped wealthy clients’ deductions.

If wealthy clients aren’t talking much about the TCJA, what aspects of reform should financial advisors educate those clients about? “One of the pieces that high-net worth business-owning clients are looking at is the loss of the pass-through deduction for certain businesses. Once the regulations are settled we can expect to see some creative workarounds,” Etter said. “A very important part of the tax code didn’t change: high-net worth clients who live mostly off of qualified dividends and capital gains can still get the zero-percent federal rate on their first $50,000 or so of dividends ($100K for married).”

“Much depends on age and stage of life,” she added. “Those in early retirement with large IRAs may want to take advantage of lower tax brackets to do Roth conversions. Those who may be on the edge income-wise of the pass-through ceiling may want to look at other ways to reduce (adjusted gross income). Are they maximizing above the line deductions through retirement funds and HSAs?”

“The new Sec. 199A deduction applies to REIT dividends and publicly-traded partnership income,” Crabtree said. “If these investments make sense for these clients from an investment perspective, they may now be more attractive than before. Also, investments in the new Opportunity Zones under Sec. 1400Z can provide gain deferral and potential exclusion down the road.”