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Mode of Hiring:
Mode of Hiring or Position Type is a contract established
between a person and a company OR between a company and
another company.
Contract between a company and a person:
W2: On W2, Candidate will work as a full time employee of a
company

(Employer)

and

employer

takes

care

of

employee and employer taxes. Employer sends w2 form

to candidate in January, for the previous year wages and
deductions. Candidates submit tax returns to IRS usually,
and occasionally employer also submits tax returns on behalf
of

candidate.

Eligible Candidates: American Citizen, Green Card (GC)

Holder, EADs (Employer Authorization Document), TN Permit
(Canadian Visa), OPT (Optional Practical Training), CPT
(Curricular Practical Training), H1B, L1 etc.
o W2 - Salary with benefits: This is FULL TIME,
PERMANENT JOB. Employee will be paid salary and get
benefits like joining bonus, vacation, holidays, workers
compensation, relocation expenses, leave encashment,
IRA,

Health/Vision/Dental/

Education

Benefits,

Life

retirement

Insurance,
plans

etc.

401k,
Usually

company pays the candidate when there is no job or in

between projects.

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o W2 - Hourly with benefits: This is FULL TIME,
TEMPORARY job. Employee will be paid on hourly basis
and they will be enjoying benefits also. As soon as the
contract period is over, employee has to find another
job.
o W2 - Hourly with no benefits: This is FULL TIME,
TEMPORARY job. Employee will be paid on hourly basis
and there are no benefits.

Contract - Independent (1099): Candidate will work as a

contractor for a company for that contract period. Company
sends 1099 form to candidate in January, for the amount
earned in previous year. Based on this 1099 form, Candidate
will submit tax returns to IRS, which includes employee and
employer taxes.
Contract to Hire - Independent (1099): To start with,
Candidate will work as a contractor for a company and later
will be hired as a full time, permanent employee for that
company. In January, company sends 1099 form for the
amount earned previous year in contract period. In addition,
they also send w2 form to candidate in January, for the
previous year wages and deductions earned after hiring him
as a fulltime employee. Based on this w2/1099 form,
Candidate will submit tax returns to IRS, which includes
employee and employer taxes.

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Contract between a company and another company:
Contract - Corp to Corp: This is a contract between
Company (Client) and another company (vendor). Vendor's
candidates will work with client and client sends 1099 form
to vendor.
Contract to Hire - Corp to Corp: Vendor's candidates
work with client ON CONTRACT for a particular duration and
later they will be hired as permanent employee of the client.
Client sends 1099 forms to Vendor for the contract period
worked by the candidate. After hiring the candidate into their
payroll, client sends w2 to the candidate for the wages
earned during the previous year.

USA Tax Terms - Question and Answers:

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A. What are the different US tax terms in US staffing or in US
Recruitment?
1. W2 Tax Term - Full Time
o a. W2 - salary with benefits
o b. W2 - salary with no benefits
o c. W2 - hourly with benefits
o d. W2 - hourly with no benefits
2. 1099 Tax Term
o a. Contract with an Independent candidate
o b. Contract to hire with an Independent candidate
3. Corp Corp (C2C) Tax Term
o a.

Contract

between

corporation

and

another

corporation
o b. Contract to hire between a corporation and another
corporation.
B. What is the difference between w2 and 1099?
w2: Since candidate is an employee, the employer has to
deduct employee and employer taxes and pay to the
necessary organizations.
1099: The employee pays the employee taxes and employer
taxes.
Employee Taxes: Federal Tax, State Tax, County Tax, City Tax,
FICA,
Medicare
etc.
Employer Taxes: FICA, Medicate, FUTA, SUI, Workers
compensation, Liability Insurance etc.

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C. What is the difference between W2 and corp. to corp. (c2c)?
W2: An employee of the company is called as w2 employee.
W2 form is issued by the employer to employee who shows
salary, taxes, benefits paid.
c2c: It is a contract between one company to another
company.
D. What is the difference between corp. to corp. (c2c) and
1099?
c2c: It is a contract between one company to another
company.
1099: It is a contract between a company and candidates.
In corp. to corp. company pays employee and employer taxes,
and in 1099 employee pays employee and employer taxes.