Grads who are thinking about a career in the USA need to know certain things in advance.
Like, it’s always good to be aware of some upcoming situations to tackle them wisely. Once you are done with your education in STEM or non-STEM fields in the USA, you have several work options. The different work options are based on the duration of work, payroll benefits in government or non-govt, and more. So there are five major work options for an international student or immigrant that you need to know. Namely, W2, C2C, 1099 MICS, Full-time, and Part-time. But this article will mainly cover essential aspects of W2 and C2C. A job seeker seeking a job with the help of a recruiting or staffing agency is offered W2 or C2C or other working options. Such potential employees are either called consultants or candidates. An employee will fall under W2 or C2C group depending on the staffing agency, the Employer, and some other factors.
Key Aspects of W2
W2 is the way of categorization based on Wage and tax statements; the employees under this category come under specific tax laws of the country. And this statement covers the taxes to be paid as well as the income earned by the employee. This statement is delivered in January to every employee falling under the W2 category by their respective Employer. If someone gets a W2 contract, it is for a long time. This helps you gain mastery in your chosen field.
Key Aspects of C2C
On the other hand, a C2C contract is often for a concise period. This gives you the leverage to explore new opportunities quite often. In the W2 process, you hardly have to do any paperwork to register a business or finalize the taxes. In the C2C work process, you have to register your business as ‘S Corp’ or as ‘LLC.’ It would help if you also managed bookkeeping to find profits/losses or taxes.
A quick run through the significant differentiating aspects of W2 and C2C will help you understand clearly and better.
Differentiating points of W2
1. Contract of Longer duration
2. Process Formalities for registering business/Calculating Taxes
3. Flexibility to work with more than one Employer
4. Reimbursement is limited for certain expenses
5. The benefit of paid sick leave and vacation
6. Convenient management of Employment Relationship
Differentiating points of C2C
1. Shorter period Contract
2. Process Formalities to Register as S’ Corp or an LLC
3. Work with one Employer
4. Can claim reimbursement for more expansive areas
5. No Paid sick leave and vacation
6. Difficult Employment Relationship
Let’s take a look at the Benefits of both these Contracts:
• Better job security with increased work flexibility
• Can dedicate good time to personal life and hobbies
• Relaxed workload burden
• A lucrative opportunity to get increments and growth
• Govt. related benefits
• Opportunities for better business
• Relax from tedious tax procedures
Let’s understand what the taxes that you need to pay while working as W2 are
• State Income Tax
• Social Security Tax
• Federal Income Tax
• Medicare Tax
Apart from these, you also need to check this. Working as W2, even if you are a consultant on the contract, you get the facilities of a regular employee. You get hourly basis payments after two weeks, and the charges are through direct deposit mode.
While with C2C, the corporation gets the hiring and other benefits. But, still, there is lots of paperwork that’s still there.
Some major information of W2 Form
W2 forms show the actual wage paid to an employee and taxes deducted in a year. This form is issued by the IRS (Internal Revenue Service of the United States) mainly for daily-basis workers and employees. It can’t be issued to freelancers, business owners, independent workers or entrepreneurs.
A major impact on the selection and hiring of employees happens with the W2 form. This form gives a better understanding to the Employer about the candidate. Thus, they can easily track and trace the candidate’s work history.
Important information that is required to be added in the W2 form is categorized in different sections. It records the annual earning of an employee covering the federal tax, security tax, Paychecks, State ID no. and more. The other essential information provided in this form are about personal information, business, dependent care benefits, earnings, and retirements.
We will soon be ready with a new blog on the pieces of information that we could not cover here.
GetAJob has placed many international students and immigrants in W2 and C2C roles in different industries in the USA. You can deep dive into our facts and figures here.
If you are also seeking a similar opportunity, please connect with us at firstname.lastname@example.org or ring the bell at