It's tax time again. Lots of people who are living in retirement don't earn enough money to be required to file. But this year, low earners are entitled to some financial help from Uncle Sam -- but in order to get it, you have to file taxes.
The two best deals are the earned income tax credit, or EITC, and the Making Work Pay tax credit. Don't overlook them because they are worth the hassle.
My accountant husband prepared his unmarried sister's taxes a couple of weeks ago. In 2010, she turned 62 and got Social Security for a small part of the year. She also earned about $6,500 working as a hotel housekeeper. Less than $5 in income taxes were withheld from her checks by the hotel.
Filing wasn't required because her income was less than $7,100 -- the IRS cut off -- and it seemed like a waste of time, but skipping it would have been a mistake. By filing for the tax credits, my sister-in-law received more than $800 back from the IRS, and the money was deposited directly into her checking account within days. It was a real windfall for a woman who needs every penny she gets.
If you are a low-income working couple, you could get significantly more than that. And note that you don't have to be taking care of children or have other dependents to qualify.
Bankrate's tax expert Kay Bell has written extensively about the EITC. She points out that you don't have to get expensive tax help to figure out whether you are eligible. The IRS has a free calculator on its website that will help you.
If you think Uncle Sam owes you for either or both of these programs but filling out tax forms intimidates you, AARP Tax Aide will do your taxes at no charge and there are multiple locations in almost every area.
Taxes can be a bear, but getting everything you're entitled to is a retirement planning necessity.