"There are eight weeks left in 2010. Then April 15, 2011, the due date for personal income tax returns, looms ahead. Is it too late now to take steps to significantly reduce your income tax liability?

Newsletters and the popular press contain many recommendations related to the expected differences between 2010 and 2011 tax rates: the top Federal bracket on ordinary income in 2010 is 35% and will go to 39.6% in 2011; the capital gains tax rates are 0% and 15% in 2010, going to 10% and 20% in 2011. Therefore, taxpayers are advised to accelerate ordinary income, e.g., bond interest, annuity income, traditional IRA income, and compensation into 2010 if they expect to be in a higher bracket in the future. Similarly, taxpayers are advised to sell appreciated property and recognize the taxable gain in 2010. Of course, the impact of the recent elections on tax rates is unknown.

Individual taxpayers should also consider: oil and gain investments, because intangible drilling costs provide a large immediate income tax deduction (up to 85% of the initial investment); loss harvesting using the “similar stock” strategy or a cashless collar to avoid the “wash sale” rule; and converting from a traditional to a Roth IRA so that future distributions are tax free.

However, there are at least three deductions worth considering that have the potential to make a large difference in your April 15, 2011, return."