Hello and thank you for your question.
$105 / hr on a W2 is better before considering any unreimbursed expenses you might have to pay. This is because you will net more money with the W2 after accounting for social security and Medicare taxes. Also, with the W2, you'll be an employee which means you can qualify for unemployment if you get laid off and also receive the benefit of any tax free fringes such as medical and retirement if it's being offered. In the case of medical and certain others, these tax free fringes reduce not only income tax but also social security and Medicare taxes, whereas if self-employed you'll only reduce your income taxes via the self-employed health insurance deduction.
If you have a lot of unreimbursed expenses, then you may find it flips over to the 1099 route being the best option. This is because as an employee you'll have to claim deductions for these on Schedule A of your tax return. To do this, the expenses less than 2% of your adjusted gross income won't provide you any benefit and you'll further have to itemize your deductions instead of just claiming the standard deduction. These deductions will not reduce social security and Medicare taxes, only income taxes. As a contractor, you'll be able to deduct any of your expenses on Schedule C and without the limitations that apply to itemized deductions. They will further reduce not only income taxes but also social security and Medicare taxes.
This all assumes you really have an option. The IRS would be glad to tell you that you don't. You are either an employee or a contractor based on the specifics of the work you are performing. There is no option to choose. That said, if you should be an employee but you agree to be a contractor, chances are you'll get away with it, but it doesn't make it correct.
Note, it will cost your "employer" more to pay you $105 in wages than $108 as a contractor due the payroll taxes. If you have expenses that would go unreimbursed, you'd be better off to negotiate a lower wage based on the stipulation that you must be reimbursed. That gives you the best of both worlds: all the benefits of being an employee, more in your pocket, and full exclusion from taxable income for any expenses that the employer reimburses you for (which your employer then deducts).
In summary, your best option is to be an employee at $105 than a contractor at $108. If you would have unreimbursed expenses as an employee, negotiate a lower salary in exchange for full reimbursement. This will work out best for you, end of story!!!
Best of luck!