A fragment because it’s not a complete thought. You’re not saying what’s funny. A complete thought would be “It is funny when you make jokes.” That’s s complete thought. But “it is funny” is not.
One thing is to not stress because you have to remember you have another chance to edit for your final draft. But I would also recommend putting as much as possible into the rough draft so once it’s complete it’s easier to see what needs to be removed
I think it is the second one! I am pretty sure!
