By Joy Taylor From Kiplinger’s Personal Finance
Readers ask about tax deductions for retirees who work part-time for themselves.
Question: I am 72 years old, and I retired from my full-time job four years ago. I am now a part-time consultant and file Schedule C, reporting my income and deductions from the gig, on my federal tax return. My financial adviser said I can deduct the Medicare premiums that I pay, even though I don’t itemize on Schedule A. Is that true?
Answer: Yes. Generally, medical expenses, including premiums paid for medical insurance and for Medicare, are deductible only by those who itemize, and only to the extent that total medical expenses exceed 7.5 percent of adjusted gross income. But there is an exception for self-employed individuals who file Schedule C. They can deduct premiums they pay for medical and dental insurance and for qualified long-term-care insurance without itemizing. They claim the self-employed health insurance deduction on Form 1040, Schedule 1, part II, line 17. Premiums that you pay in your name for Medicare Parts A, B, and D are part of that deduction.
Question: I retired from my full-time job a few years ago and receive a pension. I decided this year to work part-time for myself as a dog walker, and I drive to my clients’ homes. Can I deduct the standard mileage rate for my business driving?
Answer: Yes. The cost of business driving for self-employed individuals is a deductible business expense. You can claim either your actual expenses, including gas, repairs and depreciation on your car, or the IRS’s standard mileage allowance. For 2026, the standard mileage rate for business driving is 72.5 cents per mile. If you use the IRS’ standard mileage rate, you can also deduct the cost of any tolls or parking fees that you pay.
Keep a contemporaneous mileage log detailing each of your business trips to clients’ homes, which will make it much easier for you to figure your total business mileage when you are preparing your tax return. It will also help you if you are ever audited by the IRS.
Question: I recently retired from my full-time job, and I am now an independent freelance writer. Can I claim the 20 percent deduction for qualified business income?
Answer: Generally, yes. Self-employed people, independent contractors, and owners of LLCs, S corporations and other pass-through entities can deduct 20 percent of their qualified business income (QBI), subject to limitations for individuals whose taxable income in 2026 exceeds $403,500 for joint filers and $201,750 for single and head-of-household filers.
Note that you don’t claim the QBI deduction on Schedule C. Instead, you would attach Form 8995 or 8995-A to your return and take the write-off on line 13a of Form 1040.
Question: I am a lawyer and retired five years ago from my law firm. I still do legal work for some clients on a part-time basis as an independent contractor. I recently turned one of the bedrooms in my house into an office where I can do my work. Can I claim the home office deduction?
Answer: Yes, if you meet all of the rules for claiming the write-off. Even though employees can’t take a deduction for home office expenses, the write-off is available to self-employed people or independent contractors who file Schedule C with their Form 1040. They must use a room or space in their home or apartment exclusively and regularly as their principal place of business.
If you qualify for the write-off, there are two ways to figure the deduction. You can allocate your actual costs on Form 8829. Or you can use a simplified option by deducting $5 per square foot of space used exclusively for business, up to 300 square feet, for a maximum write-off of $1,500.
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