While not everyone can easily open up an account in the Caymans (or Switzerland, or Bermuda amongst other popular tax havens) everyone can have their own little tax shelter in the form of an IRA. Most IRAs take income before you pay taxes, saving you on your bill to the IRS. Because of the pre-tax nature of these contributions, $1 contributed to the account reduces your income by less than $1 - that's like a sale on savings!
For the self-employed, look into opening a SEP IRA. Your accountant should be able to tell you how much you can contribute in a given year and that may immediately reduce your tax bill.
If your employer does not offer a retirement plan, contributions to your personal Traditional IRA are fully deductible. For 2012, you can contribute $5,000, for 2013 you can contribute $5,500. If your income is less than these limits, the maximum you can contribute is your income.
A Roth IRA is one of the best tax shelters available. Contributions go in after you pay taxes, but come out tax free in retirement. If your income is less than $173,000 (married filing jointly) or less than $110,000 (single) you can contribute up to $5,000 for 2012 or $5,500 for 2013. If your income is less than these limits, the maximum you can contribute is your income.
You have until tax time this year to make a contribution for 2012. You can go ahead and save for 2013 anytime this year until tax time 2014!
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