If you have a profit motive, it is a business according to the IRS. If not, and you just do it for fun, then it is a hobby. Hobby income is reported on line 21 of the Form 1040. Business income goes on Schedule C (which then flows to the Form 1040) and the net profit is subject to self-employment taxes.
This IRS Article has some tips about Hobbies That Earn Income.
Generally, an activity qualifies as a business if it is carried
on with the reasonable expectation of earning a profit. In order to make
this determination, taxpayers should consider the following factors:
- Does the time and effort put
into the activity indicate an intention to make a profit?
- Does the taxpayer depend on
income from the activity?
- If there are losses, are they
due to circumstances beyond the taxpayer’s control or did they occur in
the start-up phase of the business?
- Has the taxpayer changed
methods of operation to improve profitability?
- Does the taxpayer or his/her
advisors have the knowledge needed to carry on the activity as a
successful business?
- Has the taxpayer made a profit
in similar activities in the past?
- Does the activity make a profit
in some years?
- Can the taxpayer expect to make
a profit in the future from the appreciation of assets used in the
activity?
