Do you have an IRA account? Are you 70 ½ or older and withdrawing your required minimum distributions (RMDs) from your IRA account every year? If so, and you are donating money to charities and the church, you might be paying more in taxes than you need to.

As a financial advisor, I talk with a lot of clients about their RMDs, and even though many of our clients donate money to their church and causes they care about, I seldom see clients donate funds directly from their IRA. But this strategy is a powerful tax saving tool because it allows you to keep your RMD withdrawals out of your taxable income for the year.

For example, if your required minimum distribution is going to be $10,000 this year, you would normally withdraw those funds from your IRA account and report the $10,000 withdrawal as income. But if you donate that $10,000 directly from your IRA, you’ll instead report $0 income from your RMDs. Lower income means potentially lower taxes.

Every dollar that comes out of your IRA that goes directly to charity/church is excluded from your adjusted gross income (AGI). But the benefit doesn’t end there. Lowering your AGI can have a tremendous ripple effect on your tax situation, because it can impact tax credits, deductions, exemptions, phase-outs, Social Security taxes and Medicare surtax and premiums.

This strategy can help lower your taxes without you donating additional funds. It just requires you change where those funds come from. Instead of writing checks directly from your bank account, you would set up a lump sum or monthly distribution directly from your IRA instead.

To make this strategy work, you’ll need to set up your RMD distributions directly from your IRA to the charities/church of your choice. The rules specify that you must send the RMD directly to charity to avoid reporting your RMD amount as income.

Setting this up with your IRA account is relatively straightforward. No matter where your IRA account is held, the financial institution should be able to facilitate this for you. It usually requires that you obtain the Tax ID #s of the charities and church of your choice.

If you would like more information, this strategy is called qualified charitable distribution. Research it online or talk to your financial and tax advisor to see if it makes sense for you. Like most investment and tax strategies, it doesn’t guarantee you’ll pay lower taxes, so it’s important to run the numbers for yourself.

Bottom line: If you haven’t withdrawn your RMD yet for the year, you still have time to donate those funds, and potentially save money on taxes as a result.

Micciche is CEO of True North Retirement Advisors in Clackamas. She  specializes in retirement and exit planning for business owners. She and her family are members of Christ the King Parish in Milwaukie.