Tax Terms plays a key role in US job market / US IT Recruitment so in-order to have good

understanding about US recruitment, every recruiter must have knowledge about the US Tax Terms

Basically, US IT Recruitment works on two key factors :

 Relationship between clients and Staffing Companies
 Relationship between US IT recruiters/Bench Recruiters and the management

There are three (3) Tax Terms which are generally used in US Job market.
W2
C2C
1099
W2
W2, which stands for the wage and tax statement, is a tax form given by the Staffing companies to
the Candidate in the month of January every year.
Tax : On W2 tax will be taken care by his/her employer as the employer withholds a part of pay.

What taxes need to be paid?

 Federal income Tax
 State Income Tax
 Social Security Tax (SSN) Tax
 Medicare Tax

For instance, the person who is seeking a job opportunity with a valid work authorization (US
Citizen/Green card/H1B /OPT /TN visa etc.,) is termed as consultant /Candidate.
Like wise, there are some staffing agencies who take these Consultants on their bench according to
the interest of the consultants.
If a H1B candidate is on one of the staffing companies (“X”) payroll (or made an agreement with an
employer for a certain period) then this H1B Candidate is called as W2 of this (“X”) Staffing firm
Only Green card /US citizen / EAD / TN Visa can work on W2 Tax Term
H1B are not allowed to work on W2 if they are in agreement with other employer, but they are
allowed to work on W2 when they are going to transfer their Visa.
W2 Candidates will have basic benefits from the employer’s end like Medical, insurance, PTO,401K
C2C
C2C is one of the commonly used Tax Terms in the US, which is the most preferable Tax by most of
the consultants
C2C is an agreement between two Corporations and under this Tax Term your company/corporation
is responsible for your Taxes.
Example:
You are an employee of company – X (So you are under payroll of company -X) but you are working
for company – Y, so in that case, there will be a C2C agreement between company – X & company – Y
Company – Y is not responsible for your taxes. Only your company (Company – X) will pay all the
taxes.
Any US Valid Visa can work on C2C basis.
 Visa Tax Terms

H1B C2C

OPT W2/C2C

Green Card W2/C2C

US Citizen W2/C2C

TN Visa W2/C2C

H4 EAD W2/C2C

GC-EAD W2/C2C

1099
1099 is one of the rarely used tax terms in US job market as no one prefers to work on 1099
1099 is and independent contractor or freelancer where they are liable to pay their own taxes and
files their payroll.

 Frequently Asked Questions on US Tax Terms

 What are different US Tax Terms?
There are 3 types of tax terms i.e., W2, 1099, C2C

 What is the difference between W2 and C2C or Corp-to-Corp?

C2C or Corp-to-Corp is an agreement between an individual (Valid US Visa Holder) to a
corporation.

 What is the 1099 Tax Term?

When a person is paid on 1099 tax terms, all the money earned by the candidate is paid on
untaxed bias so, the candidate is responsible to pay the tax.

 What taxes need to be paid on W2?

Federal income Tax
State Income Tax
Social Security Tax (SSN) Tax
Medicare Tax