You would only need to pay taxes to the IRS and your resident state. Since you received a Form 1099-MISC, you are treated as being "self-employed" or owning your own business as would need to file a Schedule C with your tax return. So, you can deduct expenses related to earning that income such as a home office, supplies, etc.
You can add information for your self-employment (your own business) to the Schedule C for your Form 1040 by following the directions below. (Please note: you may decide to upgrade to the Self Employed edition to help you enter all of your business income and expenses)
- Go to Federal Taxes
- Select Wages and Income
- Select I'll choose what I work on if the option is given
- Scroll to the heading Business Items
- Select Start next to Business Income and Expenses (Sch C)
You can walk through the interview to enter your income (including both your 1099-MISC, if any, and other income received) and the expenses related to generating that income.
I've also pasted a FAQ below on what a Schedule C is and how it relates to your business.
https://ttlc.intuit.com/replies/3302122
