A friend of mine is a contractor and he is currently negotiating his rate with the recruiter. One of decision he made was to get health insurance somewhere else (not thru recruiter’s company).
During the negotiation, the recruiter wants to pay for his expense for health insurance by giving personal check on monthly basis. His paycheck will reflect only total hours he works on the project times hourly rate. He is doing W2.
My questions:
1. Is this a legal practice?
2. I assume he would report the extra income when filing the tax. Is health insurance premium expense deductible?
Thanks.