Se below for what the IRS says. I think you are probably a business rather than a hobby, but you make that final determination based on all facts and circumstances (and then be prepared to defend that determination if challenged).
If you decide it's a hobby, you can't deduct expenses but you don't pay self-employment tax. If you decide it's a business, you can deduct expenses, but you pay self employment tax on the net profit. The IRS can give you grief either way if they disagree. (For example, if you take a business and call it a hobby to dodge the SE tax, or if you take a hobby and call it a business so you can deduct unallowable expenses.) Just be sure you can defend your decision.
https://www.irs.gov/businesses/small-businesses-self-employed/business-activities
A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. The facts and circumstances of each case determine whether an activity is a trade or business. Some of the important facts and circumstances used to make this determination include:
- regularity of the activities,
- regularity of the transactions,
- production of income, and
- ongoing efforts to further the interests of your business.
You do not need to make a profit to be operating a trade or business but you do need to have a profit motive. The above list is not all inclusive in the determination of whether an activity is trade or business. For more information about making this determination, see Five Things to Remember about Hobby Income and Earning side income: is it a hobby or a business?
Part-time Business
You do not have to carry on regular full-time business activities to be self-employed. Having a part-time business in addition to your regular job or business also may be self-employment.
Example: You are employed full time as an engineer at the local plant. You fix televisions and radios during the weekends. You have your own shop, equipment, and tools. You get your customers from advertising and word of mouth. You are self-employed as the owner of a part-time repair shop.
