Q: I file the IRS 990 information return for my non-profit.  Why does it ask me if my organization offers indoor tanning services?
–Sunshine on my Mind, Anchorage

A: It’s Obamacare, silly.  Section 10907 of the Affordable Care Act imposes a 10% penalty on indoor tanning services offered by for-profits or non-profits. (You didn’t notice all the tanned bodies exiting the Salvation Army?)

Q: Did Rhode Island just raise or lower my taxes?
–Poor in Pawtucket

A: Yes it did.  If your household earns less than $30,000 annually and you are accustomed to the $300 “property-tax relief” check (also available to renters), fugget about it — unless you are 65 years old and/or disabled.  What? You didn’t read about it in the news? Maybe it’s cause it wasn’t there. If you are a client and want to know if this applies to you, e-mail me.

If you are a “C” corporation your tax rate has been cut from 9% to 7% effective January 1, 2015.  If your benefactor can wait until next year to die, the estate tax threshold has gone up from $921,655 to $1,500,000.

Q: What’s an F-BAR? Is there a happy hour?
–Pat, ex-Pat

A: You mean the “Foreign Bank Account Report” and it will not make you happy. If you or your business have foreign bank holdings, the aggregate of which exceeded $10,000 at any point during the year you are required to disclose such assets by June 30 of the subsequent year or face a levy of up to 50% of the account’s value. Foreign includes Canada, and even if you are nothing but a signer on the account you must file. My firm can help.

Q: I hear the IRS has made it easier to apply to become a non-profit. Is this good or bad?
–Back of the line do-gooder

A: Yes. The IRS recently unveiled the 1023 EZ, a streamlined on-line application for organizations with under $50,000 in annual revenue. Typical applications have been taking upwards of a year to process. There is considerable concern, however that the EZ will open the door to fraudulent applications, flood foundations with illegitimate organizations requesting funds, and eliminate the important education function that applying for non-profit status has traditionally involved.

Q: How can we prevent the brain-drain of young, educated college graduates leaving Rhode Island?
–I’m outta here, Brown

A: I don’t rightly know but I read a fascinating op-ed in the Providence Journal that had some innovative ideas, like paying the student loans for college grads who live in the state for five years post-graduation. The article by Ruarri Miller is entitled “Tear Up the Book of Rules Holding Rhode Island Back.”

Q: What is the “Underground Economy and Employee Misclassification Task Force?”
–Ten Nine-Nine

A: Rhode Island is cracking down on employers who “treat full-time employees as contractors, paying them under the table or other improper methods of saving on benefits.” Fortunately I know of no such businesses.

Q: What’s your favorite avocation, other than concocting Dispatches and thinking up new ways to market yourself?
–I am Curious, Fellow

A: I love speaking to professionals about tax and finance. I’ve presented to associations of lawyers, therapists, non-profits, social entrepreneurs and artists. You guessed it — e-mail me.

I get asked this a lot.
Actually,  yes — as long it is doctor-prescribed. (The lodging is on your own.)

Clarinet lessons — Deductible “if advised by dentist for treatment of tooth defects”. (But tooth whitening to reverse discoloration — nope, this is cosmetic.)

Wigs — Yes, “if doctor has advised as essential to mental health of person who lost all hair from disease.”

Marijuana — prescribed by a physician in a state where it is legal. Not yet, folks — federal law prevails.

Air Conditioner — if you are unlucky enough to suffer from allergies or other breathing impairments like asthma, you may be able to deduct this.

Liposuction — Nope.

There is a common theme here — if a normally non-medical purchase or service is physician prescribed, you may be able to deduct it. If  it is solely cosmetic and elective, not **.  And of course there are odd ones that make it in, usually by a tax-court challenge.  For instance, Navajo healing ceremonies do qualify.  So book that trip to New Mexico.

And what may be considered a cosmetic procedure could qualify if it is deemed necessary for your business — do you have a nose job planned.? If you are a singer and your septum is screwing up your high notes, you might be in the range.   Breast implants for exotic dancers have been allowed.

Now before you start tallying your receipts for those dancing lessons that help your arthritis, take note of the biggest obstacle to deducting any medical expenses:  You may only deduct them to the extent  they exceed 10% *** of your “adjusted gross income.” And even if you hit that mark, they only count if you “itemize your deductions” — so most renters, for instance, would not qualify.

If you want to take my full medical deductions quiz,  including a question on “Jewish zings”,  click here:

For more information, contact your accountant (or maybe your physician!).

**    Exception for disfigurements due to accidents, congenital abnormalities etc.
***  7.5% threshold still applies if  you were 65 or over at end of last year.

NOTE: Federal and state tax laws are subject to change. This article is presented exclusively for informational purposes and is not intended to substitute for obtaining tax or financial advice from a tax or other business professional.