I am self-employed. How do I report my income and how do I pay Medicare and social security taxes?

Tax for 1099 contractors

Unless you think you were an employee, you report your nonemployee compensation on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business. You also need to complete Form 1040, Schedule SE (PDF), Self-Employment Tax, and pay self-employment tax on your net earnings from self-employment, if you had net earnings from self-employment of $400 or more. This is the manner by which self-employed persons pay into the Social Security and Medicare trust funds. Employees pay into the Social Security and Medicare trust funds , as well as income tax withholding, through deductions from their paychecks. Generally, there are no tax withholding on self-employment income. However, you may be subject to the requirement to make quarterly estimated tax payments. If you did not make estimated tax payments, you may be charged a penalty for underpayment of estimated tax penalty

Source : http://www.irs.gov/faqs/faq4-3.html