Thanks guys. I will file the appropriate paperwork.
If this person was an employee, then you have to issue a W-2. 1099 is for an independent contractor. Your first step is to determine whether this person was actually an employee or an independent contractor. There are IRS guidelines to help you make this determination. The previous responses to your question addressed the ultimate tax liability no matter whether you issue a W-2 or a 1099. Your description of the worker as an "employee" is why I raise this caution.
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