Recruiter said that my rate is too high and proposed low rate, but they pay my taxes:

Rate of $xx/Hr on W2(State and Federal tax will be paid by the company)

I asked does it mean that I get these money without any deductions. He said "yes".

It's W2 contract in US.

Can it be true?

How I can be sure that when I complete my taxes, it will not be required to pay all these taxes?

  • can you give us some numbers to help us understand what the recruiter means? – mhoran_psprep Jul 22 '18 at 16:21
  • @mhoran_psprep, his supposed hourly rate = mine - $10 – Alexan Jul 22 '18 at 17:25

Whatever they're offering, it doesn't do you any good (or harm). W-2 is for employees and shows your wages, salaries and tips, plus any amount withheld for state and federal income tax. The alternative is a 1099 which just shows how much you were paid as a contractor. You'll end up paying the same tax either way unless you have some unusual tax situation. Either they're stupid or they think you are. You can't take any deductions on a W-2. You report the income it shows and deduct elsewhere on your return with your customer or employer not knowing what you deduct. The company doesn't pay your taxes: it withholds tax for you and sends to the IRS. Otherwise you would have to pay it yourself.

  • 4
    You won't pay the same tax either way. If you're a 1099 contractor, you owe both the employer and employee portions of payroll taxes. W2 employees owe only the employee portion. That's one of the reasons that you need to make a higher hourly rate as a 1099 contractor in order to net the same amount in the end. – Justin Cave Jul 22 '18 at 1:36
  • @Justin Cave: you're quite right. A contractor can also subtract commuting costs from income. I was focusing on income tax. – stretch Jul 23 '18 at 17:01

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.