All Information About W2, 1099, Corp-Corp, EAD, Green Car, Citizen, TN


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All Information About W2, 1099, Corp-Corp, EAD, Green Car, Citizen, TN.

US Recruitment, US Staffing

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All Information About W2, 1099, Corp-Corp, EAD, Green Car, Citizen, TN

  1. 1. Information About US Tex Terms 1. H1-B visa holder ( can only work on Corp-to-Corp) 2. Green Card Holders/EAD 3. US CitizensApart from that there is also a category for Canadian Citizens as well they are known as TN Visa PermitHolder, they do not require any H1 and will only be requiring an employment letter and can get a TNpermit (allows them to work in US in a matter of couple of hours from Canadian Authorities and startworking in USNow H1 holders are basically people who are sponsored by their employers who are being permitted byUS to work in US for some specific time.The Employer or the H1 holder will pay the consultants salary as agreed upon and they employer will Billthe Client where the H1 is providing services to a third firm other than his employer.So they are working on W2 basis with their employers.These types of employees must always work on a Corp-to-Corp basis when providing their services to athird Party firm, through their employers or H1 holders/sponsors.In this case the Employer or h1 holder is responsible for paying the taxes for the employee and for hisown organization.Secondly GC (Green Card) or EAD holder, they can work on 1099 terms, EAD stands for EmploymentAuthorization Document, this status is provided to those H1 holders whose GC is about to be confirmedin few months.When working on 1099 basis the resource is responsible for paying his own taxes and will bill himself tothe firm/company where he is providing services. If the GC holder is also INCORPORATED (Registered asa Company) in that case he/she will work on Corp-to-Corp basis and will bill the client on behalf of theircorporation. In this case he is himself responsible for paying the taxes on his firms behalf and showsalary as suited to him to save the taxes. The US Citizens if incorporated works on Corp-to-Corp OR if notthey can only work on 1099 basis as suited to them. I have already tried to explain in the abovementioned Para. W2 is a status when the employee is directly on the payroll of the client where he hasto perform. And the Client is paying them directly.H1 holder can work on W2, so is the GC or the Citizen.W2 are of 2 types, W2 hourly and W2 Annually.As you can point out from the name W2 Hourly, he will get the salary on Hourly basis as decided onweekly, bi weekly or monthly basis and W2 Annually will get the salary twice in 1 month that is afterevery 15 days.Apart from this the most significant factor in W2 and 1099 is that W2 employees will get benefits,Gurpreet Singh
  2. 2. Information About US Tex Termsnamely Relocation Benefits, Medical/Health Insurance, dental insurance, 401K (that’s like the PF herekind of retirement plan) etc which the 1099 persons don getMore importantly there is form called W4 (Employees Tax withholding Exemption certificate).At the time of new hire it is employer’s obligation to get this form filled and deduct the taxes accordinglyin receptive pay roll periods.Contract to Hire:It means a person would be hired as a contract employee for specific period of time if they find that youare worth to be observed inside the company then they will take you for a permanent role.Federal Tax Withholding ---2010 Federal Income TaxWithholding:--Employers are required to withhold federal income tax from the wages paid to employees. The withheldamount is credited to the employees’ individual income taxes.The amount of federal income tax withheld depends on five factors:1. Payroll period,2. Employee marital status,3. Amount of wages,4. Number of withholding allowances claimed by the employee, and5. Additional amounts the employee requests to be withheld.Each employee should be provided with a Form W-4 to claim the appropriate number of withholdingallowances and identify marital status. The signed Form W-4 must be kept on file for each employee. Ifan employee does not complete a Form W-4, the employer is required to withhold tax as if theemployee were a single person claiming no withholding allowances. If not enough tax is withheld,the employee may be subject to penalties.Federal Unemployment Tax Act (FUTA).The Federal Unemployment Tax Act (FUTA) provides a federal-state insurance system for workers wholose their jobs. Social Security and Medicare Tax Rates andLimits:--Old-Age, Survivors and Disability Insurance (OASDI) SSWB (Social Security wage Board)Gurpreet Singh