A W-2 employee is an employee whose taxes are withheld by the employer and whose earnings are reported to the IRS at the year-end via a W-2. The W-2 employee completes a form W-4 at the beginning of their employment to instruct the employer on how to withhold taxes.

A 1099 employee is in most cases a temporary employee (technically, not even an "employee"). Because they are not permanent, they do not need to complete a W-4 or have the employer withhold taxes. A 1099 employee is responsible for paying their taxes directly to the IRS. The IRS requires that the employer report the earnings paid on a form 1099.

Will be working as a full-time W-2 employee for the company.

Example:
Assume that X's visa status is H1B or green card and X has attended an interview on 15th December 2004 with client MNO. MNO informed ABC that X has been selected and will be working with MNO as a full time employee from 1st Jan 2005. This happens when X's visa status is H1B or green card. MNO pays salary to X and withheld X's taxes.

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