I got a Google AdSense 1099–MISC last week. I tried entering it into TurboTax I was surprised that it said that I had to file a Schedule C (never done that before). Anyway, I found this website which explains what Google AdSense revenue means for your taxes.
Basically, if you make more than $600 on AdSense revenue you are now a small business. TurboTax makes filling out the Schedule C easy enough. For me it turns out that my business will not be a “passive activity” since I spend more than 100 hours a year on my website and other related stuff and I’m the only person in my “business” that does this. Supposedly I now get to deduct any related “business expenses” such as hosting fees, DNS registration and so on. We'll see.