Side hustles are no longer just for millennials trying to crush student debt—retirees are getting in on the action, too. From freelancing to flipping furniture, older Americans are using side gigs to supplement Social Security and savings. But there’s one big catch: the IRS is watching. In recent years, the agency has quietly increased scrutiny on income that often goes unreported or underreported. If you’re earning extra income in retirement, make sure you’re aware of the gigs that could warrant a closer look.
1. Online Selling Through eBay, Etsy, and Facebook Marketplace
Many retirees turn to online selling as a fun and flexible way to earn extra cash, whether it’s vintage collectibles, handmade crafts, or downsizing clutter. But the IRS now requires third-party platforms like eBay and Etsy to issue 1099-K forms for sellers who make just $600 or more in total sales. That’s a significant change from the old $20,000 threshold. If you’re not reporting that income, you could trigger penalties or audits. Experts recommend keeping meticulous records of what you paid for items and how much they sold for.
2. Freelancing and Consulting Gigs
Retirees often lean on their decades of experience to consult in their former industries or offer freelance services. While it’s a smart way to stay active and earn money, the IRS sees this as self-employment income, which means you’re responsible for self-employment taxes on top of income tax. If you earn more than $400 from freelance work, you must report it. Even if a client doesn’t issue a 1099, you’re still legally required to claim that income. Not doing so is a red flag for the IRS, especially if it’s a consistent gig.
3. Airbnb and Short-Term Rentals
If you’re renting out a room, a guesthouse, or your entire property occasionally through Airbnb or VRBO, you might be surprised to know this income doesn’t fly under the radar. Third-party rental platforms also issue 1099-Ks, and if your earnings exceed $600, it will be reported to the IRS. Retirees often forget to report rental income or mistakenly think it qualifies as “casual use.” But once you cross a few usage thresholds, you may owe not just income tax but local occupancy or hotel taxes too.
4. Pet Sitting and Dog Walking
This one may seem too small to worry about, especially if you’re just walking a neighbor’s dog or watching pets on Rover.com. But consistent earnings through pet care services count as taxable income, and if the platform pays you more than $600, the IRS will be alerted. Even if you’re paid in cash, you’re still legally required to report the income. Plus, you may also need to pay self-employment tax, depending on how often you provide the service. If it’s more than a hobby, it’s a business in the eyes of the IRS.
5. Tutoring or Teaching Online
Many retired teachers and professionals are earning extra money through tutoring or teaching on platforms like VIPKid or Wyzant. These platforms often issue tax forms, but even informal tutoring sessions can become taxable income if done regularly. The IRS considers education-related services as self-employment, which includes additional tax obligations. The more frequently you tutor, the more likely it is that the IRS expects to see that income reported. Forget to include it, and you could be flagged.
6. Driving for Uber, Lyft, or Delivery Services
Some retirees enjoy the flexibility of driving part-time for rideshare or delivery services like Uber, Lyft, DoorDash, or Instacart. But that income doesn’t just flow in tax-free. You’ll get a 1099 form from each company if you meet the income threshold, and you’ll also need to pay self-employment tax. Expenses like gas, maintenance, and insurance may be deductible, but only if you track them carefully. The IRS is especially watchful of gig economy earners who underreport income or inflate deductions.
7. Flipping Items for Profit
Buying items at garage sales or thrift stores and reselling them online for profit can feel like a harmless way to make a buck. But this counts as taxable income if you’re doing it regularly. Once again, the $600 rule applies on platforms like PayPal, Venmo, and Cash App if they’re used for business transactions. The IRS doesn’t care if you call it a hobby—what matters is if you’re profiting. If you buy low and sell high, Uncle Sam wants his cut.
8. Crafting and Farmers Market Sales
Selling homemade goods—whether it’s baked bread, handmade candles, or holiday wreaths—might seem too small-scale to report. But once you’re taking payments or earning more than a few hundred dollars, it qualifies as income. Most states require you to collect and remit sales tax if you’re selling in person, too. The IRS sees this type of business as self-employment, and failing to report it can get you in hot water. Keeping good records and separating business from personal expenses is key.
Retirement Doesn’t Mean the IRS Stops Watching
Retirement is a time to enjoy life, but that doesn’t mean the IRS stops keeping tabs on your income. In fact, retirement side hustles are getting more attention than ever as more Americans look for creative ways to boost their cash flow. If you’re bringing in extra money—no matter how small—it’s essential to know how that income is taxed and reported. Staying ahead of the IRS is easier than dealing with an audit letter after the fact.
Are you pursuing any of these side hustles in retirement? Have you run into unexpected tax surprises? Share your experience in the comments—we’d love to hear your story!
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