Explainer · Contracting
C2C vs W2 vs 1099: How IT Consultants Get Paid in the US
Three words decide how much of a contract rate you keep, who carries the risk, and whether you can take the job at all. W2 makes you an employee of the staffing firm. 1099 makes you a self-employed individual. C2C puts a company between you and the vendor. Here is what each one means, who it is for, and what the postings on iitjobs actually ask for.
Contracting · 11 min read
The short answer
W2 means the staffing firm that placed you is your employer. It withholds your taxes, pays the employer share of payroll tax, and pays you on its payroll cycle whether or not the client has paid yet. Benefits are sometimes included and sometimes not, which is why you will see "W2 with benefits" and "W2 hourly" as different offers. The hourly rate is the lowest of the three because the firm is carrying the employer costs.
1099 means you are a self-employed individual. The vendor pays your invoice in full and withholds nothing. You pay both halves of Social Security and Medicare through self-employment tax, you make quarterly estimated payments, you buy your own insurance, and you get no benefits. Only people whose work authorization allows self-employment can do it, which rules out H-1B holders.
C2C, corp-to-corp, means the vendor's contract is with a company, not with you. That company is either your own LLC or S-corp, or the consulting firm that employs you. It invoices the vendor, gets paid gross on net terms, and runs your payroll. The headline rate is the highest of the three because the company behind it is absorbing taxes, insurance, benefits, bench time and the wait for payment. It is the standard structure for H-1B consultants working through their employer.
The rate is not the pay. The rate is the amount of money that enters the arrangement. The arrangement decides how much of it reaches you, and when.
Who each one is for
| W2 | 1099 | C2C | |
|---|---|---|---|
| US citizen or green card holder | Yes | Yes | Yes, through your own entity or an employer |
| H-1B holder | Yes, if the staffing firm sponsors or transfers your petition | No. The H-1B is tied to a sponsoring employer, and self-employment is not permitted | Yes, through the employer that holds your H-1B |
| EAD holder (H-4, L-2, pending green card) | Yes | Usually yes, subject to the terms of the EAD | Yes |
| F-1 OPT / STEM OPT | Yes, if the work relates to your degree | Sometimes; confirm with your school and an immigration attorney | Rarely; the employer must be the OPT employer |
| Contractor with an LLC or S-corp | Possible, but the entity is unused | Possible, but defeats the purpose of the entity | Yes, this is what the entity is for |
The pattern is simple. If you can legally employ yourself, all three are open and the choice is about money and risk. If your right to work is tied to an employer, C2C through that employer or W2 through the staffing firm are the two doors, and 1099 is closed.
The comparison
| W2 | 1099 | C2C | |
|---|---|---|---|
| Who is your employer | The staffing firm | Nobody; you are self-employed | Your own company, or the consulting firm that employs you |
| Who the vendor contracts with | The staffing firm | You, as an individual | A company |
| Taxes | Withheld from each paycheck; employer pays its share of payroll tax | You pay 15.3% self-employment tax plus income tax, quarterly | The company runs payroll and pays employer taxes; you receive a W2 from it |
| Benefits | Sometimes included, sometimes not; ask which | None | Whatever your company provides |
| Insurance | Carried by the staffing firm | Your responsibility if the vendor requires it | The company carries general liability, professional liability and workers' comp, usually required by the MSA |
| When you get paid | Weekly or biweekly on payroll, regardless of client payment | When the invoice is paid, typically net 30 to net 60 | When the invoice is paid, typically net 30 to net 60, then on the company's payroll |
| Headline rate | Lowest | Middle | Highest |
| What you actually keep | Rate minus your income tax | Rate minus 15.3% SE tax, income tax, insurance and unpaid time | Depends on your company's margin, if it is not yours |
| Paperwork | W-4 and I-9 at start | W-9 at start, 1099-NEC at year end, quarterly estimates | MSA, purchase order, invoices, insurance certificates, entity filings |
| Misclassification risk | None | Highest; a full-time, client-directed engagement can look like employment | Low; the counterparty is a company |
| Layers between you and the client | One | None | One or more; see below |
| Typical for | Direct contracts with clients or large staffing firms | Independent consultants with US work authorization | Bench consultants on H-1B, and incorporated independents |
Why the same job pays three different rates
Picture a client that has agreed to pay a vendor a fixed hourly bill rate for one consultant. That number is the ceiling. Everything below it is deductions.
On W2, the staffing firm keeps a margin and pays the employer's share of Social Security and Medicare, unemployment insurance, workers' compensation, and any benefits it offers. What is left is your hourly rate, and your income tax comes out of that.
On 1099, there is no employer, so nothing is deducted before the money reaches you. Then you pay what the employer would have paid: the 15.3% self-employment tax covers both halves of Social Security and Medicare. You also buy your own health cover, carry your own liability insurance if the vendor requires it, and absorb every unpaid day.
On C2C, the company invoicing the vendor takes the gross amount and does everything a W2 employer would do, plus it waits for payment. If the company is yours, you are paying yourself a salary from it and keeping the rest as business income. If the company is your employer, it keeps a margin and pays you a salary or an hourly wage, and the gap between the C2C rate and your pay is where the bench, the insurance and the recruiter's commission live.
To compare offers honestly, convert them to the same basis. A W2 hourly rate is worth roughly the rate plus the employer's 7.65% share of payroll tax plus the cash value of any benefits and paid time off. A C2C or 1099 rate is worth the rate minus those same costs, minus the value of waiting 30 to 60 days for each invoice. When the adjusted numbers are close, choose on risk and on what your work authorization permits, not on the headline.
The layers: prime vendor, sub-vendor, and your employer
C2C rarely means one company between you and the client. A typical US contract chain looks like this.
The client signs a master services agreement with a prime vendor or implementation partner, the firm that owns the relationship and often the whole project. The prime vendor fills seats through sub-vendors, staffing firms that supply consultants. A sub-vendor that does not have the right person on its own payroll sources one from another firm's bench. That firm is the consultant's actual employer and the C2C counterparty.
Every layer takes a margin and adds a payment delay, because each company pays the next one only after it has been paid. Three layers between you and the client means three margins and, often, three net-30 waits stacked end to end. It also means the person negotiating your rate may be two companies away from the person who set the bill rate.
Two documents matter at every layer. The right to represent (RTR) is the consultant's written permission for one vendor to submit them to one client for one requirement, so that two vendors do not submit the same person and get both submissions rejected. The rate confirmation is the vendor's written statement of the C2C or W2 rate and payment terms before the interview, so the number does not move after the offer.
What the postings on iitjobs say
Every job posted on iitjobs has an engagement-type field. Looking at new US postings in the third quarter of 2026, with reposts removed so each job counts once:
| Engagement type stated by the employer | Share of US postings |
|---|---|
| No preference, any arrangement | 48% |
| Contract, Corp-to-Corp | 44% |
| Contract, W2 | 4.5% |
| Full-time only | 3.4% |
| Contract, Independent (1099) | under 0.1% |
Corp-to-corp is the single most specified arrangement on the platform and has been between a third and a half of all US postings every month this year. W2 contract is a tenth of that. Independent 1099 is close to nonexistent as a posting type, which matches what vendors say in practice: they will take a company as a counterparty, but not an individual.
C2C is an American structure. In India, where iitjobs posts a quarter of its jobs, only 7% of postings specify corp-to-corp and most are marked open to any arrangement.
Two more patterns in the data. C2C postings are less often remote than open postings: about 1 in 10 C2C requisitions is flagged remote, against 1 in 6 for postings with no stated preference. And the titles most often posted C2C are exactly the bench roles: Data Engineer, Business Analyst, Java Developer, Project Manager, Software Engineer, Java Full Stack Developer, Program Manager, DevOps Engineer, .NET Developer and AI Engineer.
On the consultant side, the public Bench Consultants directory tells the other half of the story. Of consultants who state their work authorization, about 7 in 10 hold an H-1B, and nearly 8 in 10 list themselves as available for contract. That is why C2C dominates the postings. The consultants who are available are, in the main, consultants who can only work through an employer.
How people search for this
The searches that bring people to this topic follow a few shapes: a skill plus the term, such as "Java developer C2C jobs in USA" or "SDET corp to corp jobs"; a term plus a work mode, such as "remote W2 jobs" or "1099 jobs work from home"; and a skill plus "H1B sponsorship". Recruiters search the first shape. Consultants search all three. Every one of them is a live search on iitjobs.
For consultants: five questions before you say yes
- 1
Which arrangement does my status allow?
If your right to work depends on an employer, the answer is W2 through the staffing firm or C2C through your employer. Do not accept 1099 on a visa; it is not a grey area.
- 2
Is the rate W2 or C2C, and does W2 include benefits?
Get it in writing on the rate confirmation before the interview, not after the offer.
- 3
How many companies are between me and the client?
Ask the vendor who they are submitting to and who that company's client is. Each layer is a margin and a wait.
- 4
When will the first payment arrive?
On C2C and 1099, net 45 after a monthly invoice means the first money lands about 75 days after your first day. Plan for it.
- 5
Who carries the insurance?
If the MSA requires professional liability or workers' comp and you are 1099, that is your policy to buy. On W2 and C2C it is the company's.
For recruiters: say what the engagement is
The engagement field on the iitjobs posting form (No preference, Full-time, C2C, Independent, W2) is what consultants filter on and what bench recruiters scan for. Filling it in does three things. It routes the posting to the consultants who can actually take it. It saves both sides the call that ends with "sorry, W2 only". And it makes "C2C accepted" postings visible to the bench firms who hold most of the available contract talent.
One caution on wording. Restricting a posting to citizens or green card holders can be unlawful citizenship-status discrimination unless a law, regulation or government contract genuinely requires it. State the arrangement you can support, C2C or W2, rather than who may apply, and let the consultant's employer sort out the rest.
Glossary
- W2: the IRS wage statement an employer issues; shorthand for being an employee of the staffing firm.
- 1099: the IRS form for non-employee compensation; shorthand for independent contractor status.
- C2C, corp-to-corp: a contract between two companies, the vendor and the consultant's entity or employer.
- Prime vendor, implementation partner: the firm holding the direct contract with the client.
- Sub-vendor: a staffing firm supplying consultants to a prime vendor.
- Bench: consultants on a firm's payroll who are between projects and available.
- Hotlist: the list of available bench consultants a firm circulates to vendors.
- RTR, right to represent: written consent for a vendor to submit you to a specific client and requirement.
- Rate confirmation: the written rate and payment terms agreed before submission.
- MSA: master services agreement, the umbrella contract between client and vendor, or vendor and sub-vendor.
- Net 30 / 45 / 60: days after invoice before payment is due.
- Employer of record: a company that employs you on paper and runs payroll while you work for another.
- Misclassification: treating a worker as a contractor when the working relationship is employment; the risk sits with the payer, so payers avoid 1099.
Frequently asked
Is C2C the same as 1099?
No. Both pay gross on invoice, but 1099 pays an individual and C2C pays a company. Vendors that refuse 1099 will usually accept C2C, because a company counterparty removes the misclassification question and can carry insurance.
Can I work C2C through my own LLC on an H-1B?
Not in the ordinary sense. Your H-1B is held by a sponsoring employer, and that employer must remain your employer. Own-entity arrangements on an H-1B exist but are specialised and need immigration counsel.
What does "W2 without benefits" mean?
You are an employee for tax and payroll purposes, but the firm is not offering health insurance, retirement matching or paid time off. The rate should be higher than a W2-with-benefits rate for the same job.
Why do some postings say "no C2C, W2 only"?
Usually the client's contract with the vendor prohibits further subcontracting, or the client wants a single employer of record for compliance. It is a policy, not a judgement about you.
Can I switch from W2 to C2C mid-contract?
Only if the vendor agrees to a new contract with your company and, if you are on a visa, only if the new structure keeps your sponsoring employer as your employer. Most vendors will not change terms mid-engagement.
Does C2C pay more?
The headline rate is higher. Whether you end up with more depends on how many layers sit between you and the client, what your employer's margin is, and how long the payment chain is.
A note on this page
This page is a general explainer, not legal, tax or immigration advice. Rules change and individual situations differ. Confirm anything that affects your status or your taxes with a qualified professional.
Find contract work that matches your status
Search corp-to-corp requirements by skill on iitjobs, or list yourself on the public Bench Consultants directory at iitjobs.com/bench so vendors can find you.
Search C2C jobs