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? 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. 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.
    – user62847
    Jul 23 '18 at 17:01

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