If I'm a dance instructor and get paid as a contractor, would I say I actively participate in the operation of this business?
If you are getting paid as a contractor, you would report the income as being a part of your own self-employed business if your intent is to make a profit.
If this is a side hobby, you would still report the income but it would not be considered a self-employed business.
Hobby versus Business comparison
If you are reporting this income as self-employment income (meaning you are running a business with the intent to make a profit), you will do the following in the Federal interview section:
If it is not from self-employment, you would enter the information as follows:
You will then select Other reportable income to enter your income. Be sure to mark that it was not earned as part of business.
Yes you are the owner of your own self employment business. You are in business for yourself. Use your own info. The people or company that pays you is your customer or client. You need to fill out schedule C for self employment business income. You are considered to have your own business for it. YOU are the business.