1. 100% deduction of new and used equipment purchases: A Tax and jobs bill of 2010 allows the small business owners use this deduction under the tax code of section 179. Businesses can deduct the full amount of the purchases upfront, rather than depreciating these purchases over a few years. The deductions apply to tangible equipment and personal property purchased or leased and put into service in 2011, including computers, furniture, telephone systems, certain vehicles and software, and machinery used for manufacturing.
2. Pay your property taxes in full 2011 and use this deduction against your taxable income.
3. Contribution to IRA can also reduce your income. The contribution limits for traditional IRAs and Roth IRAs is $5,000. If you reach the age of 50 before the end of the calendar year, then you’re entitled to an additional catch-up contribution of $1,000. That brings your total contribution to $6,000 if your age 50 or older by the end of 2011. There certain limits of income if you are covered by retirement plan at work.
4. Charitable contribution: Just remember that you need to keep your receipts for all the donations regardless of the amounts.
5. Sell your investments that have a loss and use the losses against your 2011 gains. If your losses are more than your gains, you can use up to $3,000 of excess loss to wipe out other income. Your can carry over the excess losses to 2012 gains. You can carry excess losses year after year until they are all fully deducted.