Hi,
I have been in the US since Aug '08
And I recently got a job offer as an Independent Contractor position. I have gotten my CPT approved at school using this offer, so that I can work. They are telling me that I would be given a 1099 form to fill my taxes instead of the usual W2 form.
If that would be in violation with my visa status, then he has asked me to go through an agency. This would basically mean that my salary would get cut, I don't want to do this.

So my question is, can I go ahead with the offer & get paid as an independent contractor ? If so what all files I need to take care of? And would this be illegal? Would this come back & bite me later on when I'm applying for H1B visa ?
What is the only difference b/w W2 and 1099 ? Is it that I have to take care of all the taxation related issues myself & fill the form myself instead of the company have me do it? Or would I be taxed more when I get 1099 as opposed to W2 ?

The pay is $40 per hour (40 hours/week) and this is a 6months contract-hire position. So what would be my tax deduction in both cases & what should I opt to do now.

I need help regarding this, Please.
Any kind of input would be helpful.
Thanks in advsnce.

Working under a Form 1099-MISC (instead of Form W-2) is a technical violation of your visa, but it is so minor and so common that the violation can be ignored.

It makes NO DIFFERENCE tax-wise, because you are exempt from FICA or self-employment taxes.

Since your work tour is less than one year, no quarterly estimated taxes are required due to the first-year safe harbor which exempts you from any under-withholding penalty. However, you need to put aside about 25% of each paycheck so you have the money to pay the taxes (to the IRS and state) when you file in 2011.

You will report the income on Schedule C, which allows you to claim several deductions (like business use of your cell phone and laptop) that you could NOT deduct under a W-2 job, but those deductions are limited.

At $40 per hour, your gross pay will be about $41,600. Expect your federal tax bill to be between $8,000 - $8,500.

Cannot comment of state tax bill because you did not state WHERE you are working.