Hi

I was working with an employer on H1b as full time.

Employer pays me regular salary on payrol(W2). And my Employer is going pay me substantial amount on 1099 for extra amount I will get.

Is it legal to have both W2 & 1099 from same employer?

The reason for 1099 is basically I am working as a consultant so vendors pay my employer with three months late. So Emplyer runs the paystubs for 75% of amount I will get. And rest 25% he will pay me later. And he informed me to decide whether I want to get rest amount on 1099 or company will pay taxes will give money after taxes.

Please let us know what should I do in order to do it right way.

Thanks in Advance

For the difference between W2 income and 1099-misc income, read
Your U.S. Tax Return: W2 vs 1099-Misc: Employee vs Independent Contractor. (http://taxipay.blogspot.com/2008/03/w2-or-1099-employee-or-independent.html)

Is there any limit on how much I can get on 1009 when I am getting both W2 & 1099 from same employer

Yes, the limit is ZERO.

Employees n a H-1B visa are to be paid under a W-2, NOT a Form 1099-MISC. What your employer is doing is in violation of your visa.

That said, YOU have little control over it, because if you object too strenuously, you can get fired and will need to return to your home country.