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In her free time, my wife writes a food blog that gets a respectable amount of traffic. From time to time, businesses will approach her to sponsor a post about their products. At the end of the year, she typically gets 1099-MISC forms for the resulting remuneration.

The blog incurs some expenses (web hosting, some material costs), but since I've been treating it like a hobby, the deduction of those expenses is limited to 2% of our AGI--a threshold it doesn't nearly approach.

What would she need to do for us to be able to treat her blog like a business instead of a hobby? For example, would she need to register as an LLC, or get a EIN? She is the only "employee" of the blog.

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While she can certainly get an LLC or EIN, it isn't necessarily required or needed. She can file as a sole-proprietor on her (or your joint) taxes by filling out a schedule-C addition to the 1040. Any income or losses will pass through to your existing income situation (from W-2's and such).

The general requirement for filing as a business in this regard has nothing to do with any minimum income, revenue, or size. It is simply the intent to treat it as a business, and unlike a hobby, the overall intent to earn a profit eventually.

If you're currently reporting the 1099-MISC income, but not deducting the expenses, this would be a means for you to offset the income with the expenses you mentioned (and possibly other legitimate ones). There is no "2% AGI" restriction for schedule-C.

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