Often around tax time we are looking for ways to reduce the tax bill. One recent law that went into effect at the end of 2015 was permanently putting into place the ability to use your required minimum distributions as a charitable gift. Prior to this becoming permanent, it was on a year by year approval with congress.

If you are 70 1/2 or older (the wonderful RMD age!), you may donate up to $100,000 of your account assets per year directly to one or more qualified charities. These donations count as part of the IRA owner’s Required Minimum Distribution and therefore offset what is required for you to draw as income. And of course, save on taxes.

For many where RMDs are above their income need and have charitable desires, this can have a big impact on taxes. Let’s say your RMD is $20,000 and during the same year you have made $15,000 of qualified donations – you will only be required to withdraw $5,000 that will go on your tax return. The $15,000 donation is not taxable like your normal RMD is.

This could potential keep you in a lower tax bracket and avoid excess taxation on Social Security benefits. In essence saving a ‘double tax.’ To qualify, all donations must be made direct to the charity and be complete by December 31st of that tax year.