W2 vs C2C vs 1099 for contract project managers: what to ask
The short answer
W2, C2C and 1099 are three ways a contract project manager can be paid. On W2 you are an employee of the staffing firm or the client, and taxes are withheld. On 1099 you are paid as an independent contractor. On C2C your own company bills the firm. Ask which one a rate is on before you compare it.
Practice your answers in Claude with Interview Coach, free
What each one usually means
The three terms come from how the work is paid and taxed. Recruiters use them as shorthand.
| Term | Who you work for on paper | What it usually means for you |
|---|---|---|
| W2 | The staffing firm or the client, as an employee | Taxes withheld from pay; benefits may be offered |
| 1099 | Yourself, as an independent contractor | No withholding; you handle your own taxes and costs |
| C2C (corp to corp) | Your own company, which contracts with the firm | Your company invoices; you run it as a business |
The IRS explains the tax side of the first two. On its page about independent contractors and employees, it says an employer generally withholds income tax, Social Security and Medicare from an employee's wages. It generally does not withhold on payments to an independent contractor.
The page is not tax or legal advice. The right choice depends on your situation, and a tax professional can tell you what applies to you.
Why the same rate means different things
A rate of 85 per hour on W2 and 85 per hour on C2C are not the same pay. On W2, the firm handles the employer side of payroll taxes and may offer benefits. On 1099 or C2C, those costs usually fall to you, along with insurance, time off and the gaps between contracts.
So compare rates on the same basis. When a recruiter quotes a number, ask which form it is on. When you compare two offers, list what each one includes and what you would pay for yourself.
Who decides your status
You cannot pick 1099 just because you prefer it. The IRS says the status depends on the whole relationship. It looks at whether the company controls how you do the work and how the business side is set up. It also looks at the type of relationship, such as contracts and benefits. No single fact decides it.
The same IRS page notes that a worker or a business can file Form SS-8 to ask the IRS to decide a worker's status. For most contract roles, the firm will tell you which forms it offers. Ask, and if the answer seems wrong for the work, ask a professional before you sign.
Questions to ask the recruiter
- Which forms does the role allow? Some clients accept only W2, some accept C2C, some all three.
- What is the rate on each? Ask for the W2 rate and the C2C or 1099 rate separately.
- What comes with W2? Health insurance, paid time off, a retirement plan, paid holidays.
- How long is the contract, and can it extend? A short contract changes what a rate is worth.
- How many hours a week, and is overtime paid?
- Is there a chance to convert to a full-time role? Ask what has happened with past contractors.
- When and how are you paid? Weekly or every two weeks, and whether timesheets need client sign-off.
Write the answers down after the call. They matter more than the headline rate.
Replies about rate and form
A recruiter may ask for your rate by message. Ask for the form and the range first, as you would for a salary.
Hi Sam, thanks for the details. Could you share the W2 rate and the C2C rate the client has set, and how long the contract runs? I am free Tuesday at 10 for a call.
Illustrative, not a real client.
If you send a rate in writing, say which form it is on. "85 per hour" with no form leaves room for a misunderstanding later. The free reply check flags a pay figure named before you know the budget, and an agreement to represent you or to sign.
Check your reply to a recruiter, free
A rate on two bases
When the recruiter quotes both a W2 and a C2C rate, write them side by side with what each includes. The gap between them is the part you would pay for yourself on C2C.
Running a C2C company
Working C2C means you run a business. You set it up, keep its books, invoice the firm, and handle its taxes and insurance. Some contract project managers prefer that for the control it gives them. Others prefer W2 for the simplicity.
If you are new to C2C, talk to an accountant before your first contract. Ask what the setup costs, what you must file, and how the business side changes your take-home pay.
Contract roles as a way in
Many project manager searches mix full-time and contract roles. A contract role can bridge a gap, open a new industry, or lead to a full-time offer. It also asks more of your planning, because the next contract is part of your search from the first day.
Recruiters who place contract project managers are a way in of their own. The free ways in checklist has three actions for that way in each week, from your headline to how fast you answer messages.
Most contract roles also come with a right to represent request before the recruiter submits you. The right to represent guide lists the questions to ask first.
The interview is the same
Whatever the form, the client interview tests the same things: your delivery stories, how you handle risk and scope, how you work with stakeholders. Contract interviews often move faster and have fewer rounds, so prepare before the first call.
Start with the project manager interview questions or the page for your role. For delivery leadership roles, see the delivery manager interview questions.
Practice with Interview Coach in Claude
Contract roles move fast from the first call to the client interview. Write your answer to one question for your role and ask Interview Coach for a check.
- Paste your resume and the job posting. Interview Coach returns the lines a hiring manager is likely to ask about, each as a question that quotes your own line, with the points a strong answer covers.
- It matches the requirements of the posting to your resume and turns the gaps into questions to prepare.
- Write one answer at a time and ask for a check. It looks for a situation, your own action, a result and a before and after figure or a named record. It does not judge whether the story is true.
Your answers start from your resume. The free review quotes your own lines and flags the 5 to fix first, so you know which lines an interviewer may question.
Free in Claude, no account. We do not store the text you send through it.
Questions
Which is better for a project manager, W2 or C2C?
It depends on your situation. W2 is simpler, with taxes withheld and sometimes benefits. C2C means running your own company. Compare offers on the same basis, and ask a tax professional what fits you.
Why is the C2C rate higher than the W2 rate?
On C2C or 1099, costs that a W2 employer usually covers fall to you, such as the employer side of payroll taxes and benefits. A higher rate can come to similar or lower pay once those costs are counted.
Can I choose 1099 instead of W2?
Not freely. The IRS says the status depends on the whole working relationship, such as who controls the work. Ask the recruiter which forms the role allows, and ask a professional if the answer seems wrong.
Keep going
- Right to represent: what to ask before you agree
- What to say when a recruiter asks your salary expectations
- How to find project manager jobs
Last updated: October 24, 2026