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I know that a W9 is required when paying over $600 to a US individual or company that is your vendor. What I'm confused about is why you don't need to request a W9 if you walk into best buy and have Geek Squad fix a computer for $650. However, you do need to request a W9 if you hire someone to come paint your office.

What's the difference between these two things?

  • 1
    I think you are confusing Form W-9 with Form 1099 Misc... – Jack Fleeting May 14 '19 at 20:43
  • If a business if going to file a 1099, they need a W9 from the vendor. – user6726 May 14 '19 at 23:11
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The key difference is that Best Buy is a corporation, and you are probably thinking of a painter who does not do business as a corporation. (They might be a sole proprietor, for instance.)

As far as I know, the $600 rule isn't about Form W-9 itself. Rather, the rule is that when your business pays more than $600 for services, you may be required to file Form 1099-MISC. One of the boxes on that form asks for the recipient's Taxpayer Identification Number (TIN), so you have to get that from them somehow, and a common way (though not the only way) is to give them a Form W-9 and ask them to fill it out and return it to you. Form W-9 also asks the recipient to state whether they are subject to backup withholding; if they are, or if they won't give you their TIN, then you have to withhold taxes from the payment and send it to the IRS, reporting this on the 1099-MISC as well.

Now, if you look at the section "Exceptions" on the 1099-MISC instructions:

Payments for which a Form 1099-MISC is not required include all of the following.

Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). However, see Reportable payments to corporations, later.

Best Buy is a corporation, and none of the exceptions under "Reportable payments to corporations" apply when you are paying them for computer repair services. Therefore, you do not have to file a 1099-MISC when you make such payments to Best Buy. As such, you have no need to get their TIN, and therefore no need to ask them to fill out a W-9.

  • It still applies to sole proprietorships. Please read the link in my answer. This answer is wrong. – Putvi May 14 '19 at 21:46
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    @Putvi: I don't understand - what still applies to sole proprietorships? I agree that a business typically does need to get a W-9 when making a payment to a sole proprietorship, and that's what my answer says. You would also use W-9 for a corporation if you needed to get their TIN for some reason - but in most cases, you don't. – Nate Eldredge May 14 '19 at 21:55
  • @Putvi: By the way, I did read the link in your answer, and I don't see any contradiction between it and what I wrote. – Nate Eldredge May 14 '19 at 21:57
  • "The key difference is that Best Buy is a corporation, and your painter presumably isn't (more likely a sole proprietor)." Is what I was referring to. – Putvi May 14 '19 at 21:57
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    @Putvi: What's wrong with that? If your painter were a corporation, the exception on 1099-MISC would apply, and there'd be no need to get a W-9 from them. But the OP is probably thinking of a painter who is a sole proprietor, not a corporation, and therefore the 1099-MISC / TIN / W-9 are needed. – Nate Eldredge May 14 '19 at 21:59
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It is normally used by a business that hires an independent contractor. https://www.investopedia.com/articles/personal-finance/082714/purpose-w9-form.asp

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    Why wouldn't Geek Squad be considered an "independent contractor" like in my example? – Chris May 14 '19 at 20:41
  • You are walking into their place of business and paying for a service, just like if you bought any service from a store. You aren't contracting someone. – Putvi May 14 '19 at 20:42
  • So would this apply if a business used a service like Fiverr.com too? If you're not familiar with it, Fiverr allows you to buy a service from a marketplace of sellers. It includes everything from logo design to voiceovers. – Chris May 14 '19 at 20:45
  • I haven't used Fiverr to be honest, but if you hire an independent contractor from it and you are a business, then yes. – Putvi May 14 '19 at 20:47
  • @Chris "Why wouldn't Geek Squad be considered an independent contractor": because it's not; it's a corporation. A Geek Squad customer pays money to the company for its services, so it furthermore does not matter to the customer whether the technician performing the services is working for the corporation as employee or as an independent contractor; the customer's relationship is with Geek Squad. With fiverr, it sounds like they connect you to a contractor whom you then pay directly. So that would be different. – phoog May 15 '19 at 17:08

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