I believe you can show it as income to your 1040. The fact that you received a 1099 means you are not an employee. You should file for a DBA (Doing Business As) so you can deduct all your expenses as "business expenses". Having a business name opens up all kinds of legitimate/legal tax deductions
I operate a small business with myself as Sole Proprieter. My business expenses lower my tax bill by several thousand dollars. You should file for an EIN (Employer Identifictaion Number) as well.
It is very easy to do. Just go online fill out a few forms. The DBA may have to be done in person.
