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Little time left for earning tax breaks; Charitable giving easiest way to save

Clearing out the closets to make room for new Christmas gifts can earn you a tax deduction for 2011.

So can making your January mortgage payment today or selling a stock that lost value for you this year.

Even though 2011 is nearly history, there's still time to reduce your tax bill.

"Just because there are just a few days left doesn't mean you can't try to do anything," said Ted Johnson, principal with Parms & Co.

Making a charitable donation -- of old clothes, household items or cash -- is among the easiest tax-saving steps an individual can take between now and Saturday. Just make sure the donation goes to a qualifying charity, and get a receipt.

Johnson said if you mail a check today, you can take a deduction for 2011 even if the check is not cashed until 2012.

Other potentially quick and easy steps that taxpayers can take before the year ends to help reduce the 2011 tax bill include making your January mortgage payment to claim a deduction for interest and paying at least a portion of your 2012 real-estate taxes.

People who make estimated state and local tax payments could accelerate the payments due in 2012 by making them in 2011 instead. And if you, your spouse or a dependent is going to college, consider prepaying 2012 tuition to take advantage of education tax credits.

If you can swing it with your employer, maybe you can make an additional contribution to your 401(k) retirement plan.

Need new windows? Finding a contractor to install energy-efficient windows or doors or add insulation before the end of the week can mean a federal tax credit of up to $500. This credit expires this year.

Johnson said bunching deductions together in one return can be especially helpful to taxpayers who are right on the edge of being able to itemize on their tax return and cut their tax bill.

Assuming it qualifies as a deduction, the purchase of a piece of work-related equipment can help the self-employed save on taxes, because its cost may be able to be written off this year's tax bill, Johnson said. Small-business owners, for example, also can claim a deduction for software that helps them organize their taxes and receipts.

Self-employed taxpayers can reduce their taxable income for 2011 by waiting until 2012 to bill customers, he said.

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