Donating to charity is a great way to give back to your community and fund the causes you believe in. And to give people an additional incentive to do good, the government offers a tax deduction for charitable contributions.

Charitable donations may play a big role in your retirement tax planning. But there's one strategy for donating that you may not be aware of, and if you don't take advantage of it, you could be missing out on some big money-saving opportunities.

A jar full of coins labeled Donate.

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Donate directly from your retirement account

Once you turn 70 1/2, you have the option to make qualified charitable distributions (QCDs) directly from an Individual Retirement Account (IRA). When you do that, the money goes directly to the nonprofit of your choice. The funds never touch your bank account.

Once a person turns 72, they must start taking a certain percentage of money out of their IRAs each year -- their required minimum distributions (RMDs). The amount is based on your age and the account balance at the end of the prior year. If you have a large balance in your IRA, an RMD could be more than you need to fund your retirement, resulting in an unnecessarily high withdrawal, and thus an unnecessarily high tax bill. But one of the big upsides to QCDs is that they count toward your RMDs.

QCDs are limited to $100,000 per taxpayer per year, but that should more than cover most people's RMDs. And when you make donations using a QCD, you reduce the tax burden that your RMD puts on you. But the way this tactic works provides some big tax benefits for retirees above and beyond your typical charitable donation tax deduction.

Keep more of your Social Security and pay less for Medicare

As your overall income in retirement rises, the portion of your Social Security benefit that counts as taxable income also climbs. The IRS uses a metric called "combined income," which is the sum of your adjusted gross income, any non-taxable interest you collect, and half of your Social Security payments. If your combined income rises above a certain threshold, more of your Social Security benefits become taxable.

If you take a regular withdrawal from your IRA and then donate it to charity, you'll see your adjusted gross income rise, but you can offset it by deducting the charitable donation.

When you make a qualified charitable distribution, however, your adjusted gross income is unaffected. That means the combined income calculation is also unaffected, ensuring you get the most from your donation.

Likewise, your Medicare premiums will be impacted by your adjusted gross income -- if that figure is even $1 over the threshold set by the government, you'll end up paying higher monthly premiums. For 2022, the cutoff to pay the standard Medicare Part B premium of $170.10 per month is $91,000 for an individual and $182,000 for a married couple.

Donate and take the standard deduction

Typically, when you make sizable charitable donations, you must itemize your deductions to get the tax benefits. But with qualified charitable distributions, you can get those tax benefits while still taking the standard deduction. That's because, as mentioned above, the distribution doesn't impact your adjusted gross income.

That's great for retirees who may have a high bar for itemizing deductions. The standard deduction in 2022 for a married couple filing jointly over 70 1/2 is $27,300. If you're retired, you might have paid off your mortgage, which is usually a big source of itemized deductions, raising the bar for you to get a tax benefit from your donations.

Using a QCD gives you the benefit of the tax deduction for your entire charitable donation, and you get to take the standard deduction on top of that, supercharging your tax savings. Factor in the impact of using a QCD to reduce your taxes on required minimum distributions and cutting the amount of your Social Security benefits that are taxable, and your tax bill could end up a whole lot lower.