Hobby or business has been a long-standing question. Part of it is whether you are holding yourself out in that activity as a business.
From IRS
https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business
Here are nine things taxpayer must consider when determining if an activity is a hobby or a business:
- Whether the activity is carried out in a businesslike manner and the taxpayer maintains complete and accurate books and records.
- Whether the time and effort the taxpayer puts into the activity show they intend to make it profitable.
- Whether they depend on income from the activity for their livelihood.
- Whether any losses are due to circumstances beyond the taxpayer's control or are normal for the startup phase of their type of business.
- Whether they change methods of operation to improve profitability.
- Whether the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business.
- Whether the taxpayer was successful in making a profit in similar activities in the past.
- Whether the activity makes a profit in some years and how much profit it makes.
- Whether the taxpayers can expect to make a future profit from the appreciation of the assets used in the activity.
In this case, what expenses do you have in this? If simply referring people to a business to earn "rewards" doesn't lend itself to any expenses. If you classify it as a business, you would need to file Sch C and then end up paying self-employment tax on the profit. Expenses would be deducted on Sch C as a business. Expenses for a hobby are deducted on Sch A and are limited.
**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**
