At 66 With $600,000 Saved, She’ll Start Pet-Sitting for Fun Money. The IRS Wants Self-Employment Tax, and Social Security May Hold Back Benefits

Her first payment came through a pet-care app: a few hundred dollars for a week of feeding two cats and walking a beagle. That’s when it made sense. At 66, with $600,000 saved for retirement and Social Security checks already coming in, she’s running a small business, and both the IRS and Social Security have rules for that.

Lots of new retirees end up here. Pet-sitter forums are full of people comparing tax notes, and one tip comes up again and again: keep food expenses, vehicle expenses, business supplies, and insurance costs tracked separately. It’s good advice, because both the IRS and Social Security measure her net profit.

Two Sets of Rules Start Once the Dog Money Adds Up

Start with her full retirement age. If you were born in 1960 or later, it’s 67. So at 66, she’s still a year short, which means Social Security’s earnings test applies to her.

In 2026, if she’s under full retirement age for the whole year, Social Security holds back $1 from her benefits for each $2 she earns above $24,480. Because she’s self-employed, it considers only her net earnings from self-employment, meaning what’s left after expenses. Her IRA withdrawals, interest, and capital gains don’t count toward the limit.

The tax rules kick in much sooner. Once her net self-employment earnings reach $400 for the year, she owes self-employment tax and files Schedule C and Schedule SE with her return. Self-employment tax is just Social Security and Medicare tax for people who work for themselves: 12.4% for Social Security plus 2.9% for Medicare, or 15.3% in total. Employees pay 7.65%, and their employer covers the rest. She’s both the worker and the boss, so she pays the full amount.

She gets two breaks. The tax is figured on a slightly trimmed version of her profit, and she can deduct one-half of the tax on her return.

What $30,000 in Pet-Sitting Profit Really Costs Her

Let’s say she clears $30,000 in net profit in 2026 after supplies and mileage:

• Her self-employment tax comes to about $4,239, and around $2,119 of that is deductible.
• After the standard self-employment earnings adjustment, about $27,705 counts toward Social Security’s earnings test, resulting in roughly $1,613 in withheld benefits.

If she nets $12,000 instead, her self-employment tax drops to around $1,696, and none of her benefits are withheld.

Why the Held-Back Benefits Sting Less Than They Look

The self-employment tax is money she won’t see again. The withheld benefits come back to her. Social Security says withheld amounts aren’t lost. Once she hits full retirement age, her monthly check increases to make up for them. Her pet-sitting could also increase her benefit permanently. Social Security reviews earnings every year, and if a recent year is one of your highest, it recalculates the benefit. That increase is retroactive to January of the year after the money was earned.

In 2027, she reaches full retirement age, and the limit jumps to $67,920. Social Security only considers what she earns in the months before her birthday month. Above that limit, it holds back $1 for every $3.

Keep Saying Yes to Clients and Plan for the Gap

She has two options. She can turn down bookings to stay under $24,480. Or she can take the work, let some benefits get held back for a while, and cover the gap from savings.

For most people with $600,000 saved, the second option is better. Turning down paying clients to protect money that comes back anyway just leaves income on the table. Capping your earnings only makes sense if every monthly check is already spoken for and you don’t have any cash cushion.

Simple Habits That Shrink the Tax Bill

1. Log every mile. She can deduct ordinary and necessary business costs. Driving to clients’ homes generally counts as business mileage, and the IRS rate for July through December 2026 is 76 cents per mile, up from 72.5 cents during the first half of the year.
2. Keep receipts for supplies and her phone. Leashes, waste bags, and treats count. So does the share of her phone bill that goes to booking and texting clients.
3. Set aside money for taxes. If she expects to owe $1,000 or more, she’ll generally need to make quarterly estimated payments through Form 1040-ES, which cover both income tax and self-employment tax.
4. Expect forms from the apps, and get insured. Payment apps and online marketplaces may send a Form 1099-K, but all of her income is reportable whether a form shows up or not. Pet-sitter liability insurance covers things like a dog bite or a lost house key, and the premium is considered a business expense.

Check This One Number Every Month

Keep a running total of her net earnings for the year and compare it to $24,480. If she’s on track to pass it, she should tell Social Security early so the withholding comes out in a lump sum instead of as a surprise bill later. She should avoid mixing up gross bookings with net profit. Social Security and the IRS both look at net profit, so every missed receipt makes her look like she earned more than she did.

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