Looking for information technology jobs? Here is the description of IT contracts like w2,1099 and corp-corp and information on where to find those jobs.
IT contract jobs have three main classifications. They are W2, 1099 and corp-corp. Let us first look into the simple definitions of these three.
If you are an individual, provide IT services to a company, bill the company for the services and handle the taxes that you need to pay on your own then you are a 1099 contractor.
If the company takes you in their pay roll, you work as their employee and the company pays the taxes for you, then you are into a w2 contract.
If you are a corporation and provide IT services to another corporation and bill them for the services you provide then it will be a corp-corp contract.
W2 contract can be further classified into W2 Hourly and W2 Annually. W2 Hourly jobs pay the employees on hourly basis and they receive their salary weekly, bi-weekly or monthly. W2 Annually jobs pay the employees twice in a month.
The employer will have to fill up a W2 tax form for which employee that have hired. The form w2 will have the report of salary given to an employee in the calendar year.
A W2 form has 6 copies:
• Copy A - Submitted by the employer to the Social Security Administration. (In addition, the employer must also submit Form W-3, which is a summary of all Forms W-2 completed, along with all Copies A submitted. The Form W-3 must be signed by the employer.)
• Copy B - To be sent to the employee and filed by the employee with the employee's federal income tax returns.
• Copy C - To be sent to the employee, to be retained by the employee for the employee's records.
• Copy D - To be retained by the employer, for the employer's records.
• Copy 1 - Submitted by the employer to the employee's state or local taxing authority as required by law. Some tax jurisdictions do not require a copy of the W-2 to be sent to them.
• Copy 2 - To be filed with the employee's state or local income tax returns (if any).
W2 is considered as the simplest option to choose and it really doesn’t require you to understand all the complexities in paying tax. W2 employees are eligible for benefits like Medical benefits, Vision benefits, Dental benefits, Life Insurance benefits etc. But these employees generally pay more tax than 1099 contractors.
1099 contracts is self-employment. It requires complex accounting and book keeping. As explained earlier, a 1099 consultant will be responsible to pay all the applicable taxes.
The 1099 contract is easy to get started and easy to discontinue at the end of the contract. Apart from the income tax, these contractors will also have to pay self-employment tax.
A consultant who want to be his own boss and willing to take the responsibilities of dealing with all the taxes involved, then he/she can go for a 1099 contact.
This is the most complicated option of all. You set up a corporation, render your IT services to another corporation and get paid by that corporation. Unlike 1099, you don’t have to pay self-employment tax for a corp-corp contract.
Even though you own the corporation, you and your corporation are seen as separate legal entities. You will have to get a checking account for your business apart from a personal account that you have for you. Apart from this, you are an employee of your own business and you have to pay some salary for yourself.
As an individual you won’t be filling any 1099 form but your organization will be paying payroll taxes.
Where to find IT contracts and permanent jobs?
Corp-corp.com is a portal that is exclusive for both IT contract and permanent jobs. It’s unique FETCH engine determines what is best for you and brings the best matched jobs to your inbox. To know more about FETCH, read this article:
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