Every recruiter needs to be familiar with US TAX Terms to have a thourough understaning of US Recruitment and TAX Terms plays an important role in the US job market and recruitment process.
In the US job market, there are three (3) TAX terms which are commonly used.
Now, let's explore these 3 taxes in detail:
W2
- On W2, taxes will be paid by the employer to IRS (Internal Revenue Service) [US Government body].
- Under a W-2 employment, the candidate will be employed as a full-time worker by a company (the employer), and the employer takes care of all the taxes the person needs to pay, including their own taxes and the candidate’s taxes.
- Note: A candidate who is officially employed by an employer and receives a W2 form on or before January 31 of any year is referred to as a W-2 employee.
C2C
- On C2C, there is a mutual agreement between two (2) corporations, where one corporation (Company A) hires an employee from another corporation (Company B) to work on a particular project for a fixed contract time period.
- Here, Company A pays the money to Company B (real employer or the candidate), and the real employer pays to their candidates. Means, no direct payment between candidate and Company A
- Note: In real the candidate is already on the payroll of Company B (W2 employee) but works for Company A for a contract period.
1099
- It is a temporary employment. The employee himself will pay taxes to IRS (Internal Revenue Service) [US Government body]
Payment Terms
Some of the commonly used payments terms are Net 7/30/60/90.
Net 7/30/60/90 – What is it and why does it matter?
- Net “random number” is an invoicing payment term which specifies the time before the invoice is due.
- “Net” refers to the amount due and the numbers refer to the number of days available to make a payment after the date the invoice had been created.
The term Net 7 means that the amount due must be paid within 7 days.
The term Net 30 means that the amount due must be paid within 30 days.
The term Net 60 means that the amount due must be paid within 60 days.
The term Net 90 means that the amount due must be paid within 90 days.
Note: There are many variations such as net 7, net 10, net 15, net 45, net 60, net 90… and there are no rules to use a certain number, you could use 9 or 17 for all you like.