What form do i have to file if my employer filed a 1099 and I work hourly under him - is it a W-2?
Where do I pay my taxes on my hourly income - does the IRS have a payment center for the tax I pay?
Is this a hobby tax?
What tax do I pay the city?
Does this require a sole proprietor license?
Forms 1099 and W2 are mutually exclusive. Employers file both, not the employees.
1099 is filed for contractors, W2 is filed for employees. These terms are defined in the tax code, and you may very well be employee, even though your employer pays you as a contractor and issues 1099. You may complain to the IRS if this is the case, and have them explain the difference to the employer (at the employer's expense, through fines and penalties). Employers usually do this to avoid providing benefits (and by the way also avoid paying payroll taxes).
If you're working as a contractor, lets check your follow-up questions:
where do i pay my taxes on my hourly that means does the IRS have a payment center for the tax i pay.
If you're an independent contractor (1099), you're supposed to pay your own taxes on a quarterly basis using the form 1040-ES. Check this page for more information on your quarterly payments and follow the links. If you're a salaried employee elsewhere (i.e.: receive W2, from a different employer), then instead of doing the quarterly estimates you can adjust your salary withholding at that other place of work to cover for your additional income. To do that you submit an updated form W4 there, check with the payroll department on details.
Is this a hobby tax
No such thing, hobby income is taxed as ordinary income. The difference is that hobby cannot be at loss, while regular business activity can. If you're a contractor, it is likely that you're not working at loss, so it is irrelevant.
what tax do i pay the city? does this require a sole proprietor license?
This really depends on your local laws and the type of work you're doing and where you're doing it. Most likely, if you're working from your employer's office, you don't need any business license from the city (unless you have to be licensed to do the job). If you're working from home, you might need a license, check with the local government.
These are very general answers to very general questions. You should seek a proper advice from a licensed tax adviser (EA/CPA licensed in your state) for your specific case.
