lucy24 - 11:25 pm on Dec 10, 2012 (gmt 0)
Calling it a business seems to be begging the question. I'd have assumed it was self-employment income. There's a line for it on the 1040. If you get more than $400 you have to file the long form like all the rich people. But it counts towards the Earned Income Credit. (I have filed the long form for just about as long-- haha --as I can remember.)
If you get more than $600 in self-employment income from a single source, that source (not you) has to file a tax form whose number escapes me at the moment. But that's for google's computer to deal with.
The horse's mouth [irs.gov] (this is of course last year's info) says you have to file if, #1, your income is over $9500-$16450 --the number depends on your age and your filing status-- or #2 you had over $400 in self-employment income, or #3 you owe assorted kinds of taxes that you can look up for yourself. There are some others but those are the likeliest ones. Can we assume you are not anyone's dependent? There's a whole separate set of rules then.
My favorite line in the 1040 instructions has always been the one that says you are only allowed to deduct gambling losses if you are a professional gambler. Win $1 more than you lost, and you are sitting pretty.