Tax terms play an essential role in the US job market. So to have a good understanding of US recruitment policy, every recruiter should have a good understanding of the various tax policies and should adopt the service beneficial for both recruiters and employers. 

Today, CloudVandana is describing the tax policies of W2, C2C, and H1B and will show why Staff Augmentation is the best solution compared to those hiring models. 

The US IT hiring works on two key factors-

  • Relationship between clients and staffing companies
  • Relationships between USIT recruiters/ Bench recruiters and the management.

Let’s have a look at every tax term in detail.


Form W-2 is an internal service tax form used in the United States for wages paid to employees and the taxes withheld from them. Employers must complete a form W-2 for each employee to whom they pay a salary, wage, or other compensation as a part of the employment relationship. 

The employer needs to generate a completed W2 form for all the employees to pay salary, wages, or other forms of compensation against employment.  It consists of information about an employee’s annual return along with the amount of tax that is deducted from the salary. 


C2C is the most commonly used Tax term in the US, which is the most preferable Tax by most consultants. C2C is an agreement between two corporations, and under this tax term, the company or the corporation is responsible for the taxes. Any valid US visa can work on a C2C basis. 


The H-1B is a visa in the United States under the immigration and nationality Act, section 101, that allows U.S. employees to temporarily employ foreign workers in specialty occupations. 

Staff Augmentation

Staff augmentation is an outsourcing strategy used to staff a project and respond to the business objectives. The technique consists of evaluating the existing resources and then determining the additional skills that are required. 

Staff Augmentation is a remote hiring model that allows companies to build a team of skilled IT professionals to enhance productivity and fill the gaps on projects in compliance with the current business objectives. This hiring process is maintained by an IT partner who provides official employment and insurance and takes care of taxes for the remote staff. 

In this case, the augmentation services are maintained by an IT partner, who provides official employment and insurance and takes care of taxes for the remote staff.

Types Of Staff Augmentation

There are two main types of staff augmentation hiring-short term and long-term. 

  • Short-term staff augmentation services are used when there is a short-term need for specialists or when in-house specialists are unavailable. 
  • Long-term services are used in longer projects when there is a need to fill a skill gap or cut operational costs, or when it is impossible or difficult to hire an in-house staff member.

Staff Augmentation can be divided into three categories. 

Commodity-Based- When a reliable workforce is needed without any specific skill set, then the model is called commodity-based.

Skill Based-When workers are needed with a specific skill set, but the level of those skills is not critical, then the model is called the commodity-based model. 

Highly Skilled- When an organization needs professionals with a very advanced skill set that can be attained only through significant training and experience, then the model is called the highly skilled staff augmentation model. 

Advantages Of Staff Augmentation Compared To W2, C2C

1. Companies and employees do not need to worry about the tax procedure as the responsibility is performed by the IT Staff Augmentation firm. 

2. Organizations can increase the flexibility and capability of the team. They can make the contract with a staff augmentation company whenever required. After the completion of the project, the contract can be terminated by just forwarding a formal notice to the augmentation firm.

3. Productivity is always high with the augmented team as the remote developers are always focused on their assigned tasks. 

4. Intellectual property rights are secured as the developers are always dedicated to the project from the beginning.

5. Staff Augmentation can save valuable time for the organizations as they can hire skilled and experienced developers from different countries immediately. 

6. Organizations can cut operational costs as they do not need to pay administrative and organizational expenses like office rent, utility bills, etc., which is only possible through this model. 

There are various other benefits of staff augmentation that organizations can experience by hiring remote developers from CloudVandana. Are you looking for skilled remote developers to enhance your organizational process and deploy your projects faster? Please schedule a call with CloudVandana and stay one step ahead of your competitors. Call us now.

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