Could any one brief me about the Corp to corp tax? What is the difference between W2 and Corp to Corp?:)

Are you working under an H1B foreign work visa?

Thanks
Shirley

Hi, Good day! No I am working for a consultancy. - recruitment. I want to know about the difference between W2 and Corp2corp.

GilbertJay,

There are actually 3 options:

W-2, 1099 and Corp-to-Corp.

The three options (W-2, 1099, and Corp-to-Corp) vary in complexity with W-2 being the simplest and setting up your own corporation the most complicated. You need to weigh the trade-offs of each approach and pick the one that fits your lifestyle best.

#1. W-2 - Taxes are withheld and paid in for you by the employer. If you hate doing taxes and hate tax time, this is more than likely the route you should take.

#2. Corp-to-Corp - If you are detail oriented and don't mind doing some accounting, like running your own business than this is probably the way you should go. You will see tax savings, but you will have to do some work to get there. In this senerio you are running your own business and contracting your services to the corporation. YOu should have some knowledge of accounting as you will need to set up and run your own corporation.

#3. 1099 self employed consultant. If you go this route you must be willing to take a risk. It is more difficult and confusing and you will be more of a target for the IRS. The risks of this will probably have you deciding to go one of the other routes. You have to pay in yourself employment taxes on a regular basis and make sure your deductions for business are separate from personal. You may need some good tax advisors to go this route.

Hope this helps, if you need more help let me know.

Shirley