Money from an individual retirement account can be donated to charity. In addition, if you've reached the age where you need to make required minimum distributions (RMDs) from your traditional IRAs, you can avoid paying taxes on them by donating that money to charity. That tax break was made permanent in 2015. You just have to be sure to follow the rules carefully. Here's what you need to know.

• Funds from an IRA can be used for charitable donations if done correctly.
• Tax breaks on the charitable donation cannot be combined with the tax break on retirement savings.
• The IRS has established rules to make sure qualified charitable distributions are made properly.

Normally, a distribution from a traditional IRA incurs taxes since the account holder didn’t pay taxes on the money when they put it into the IRA. But account holders 70 1/2 or older who make a contribution directly from a traditional IRA to a qualified charity can donate up to $100,000 without it being considered a taxable distribution. The deduction effectively lowers the donor's adjusted gross income (AGI).

For 2020, the base standard deduction is $12,400 for individuals or married individuals filing separately, $18,650 for heads of household, and $24,800 for married couples filing jointly.

Taxpayers whose annual income affects their Medicare premiums might also find this provision helps control the premium cost.

The donation can also help meet all or part of the IRA’s required minimum distribution (RMD) for the year.

Notably, owners of traditional IRAs must start taking RMDs at age 72 or face tax penalties. Roth IRAs do not require distributions while the account holder is living so this provision doesn't work for them.

Account holders who are 70 1/2 or older can donate to a qualified charity directly from a traditional IRA, effectively lowering their adjusted gross income.

Using an IRA to make a charitable donation can help lower a tax bill and help a worthy cause. Distributions must be made directly to the charity, not to the owner or beneficiary. All distribution checks need to be made payable to the charity or they will be counted as taxable distributions.