Best examples of 3 practical examples of 1099-MISC form (Plus More Real-Life Scenarios)

3 practical examples of 1099-MISC form you’ll actually recognize

Let’s start with three clear, practical examples of 1099-MISC form situations. These are the kinds of payments the IRS had in mind when it redesigned the 1099 family a few years ago.

Example 1: Business pays rent to a landlord (Box 1 – Rents)

Imagine a small marketing agency renting office space from an individual landlord.

• The agency is an LLC taxed as a partnership.
• The landlord owns the building personally, not through a corporation.
• The agency pays $2,000 per month in 2024 for office rent.
• Total rent paid for the year: $24,000.

This is a textbook example of when Form 1099-MISC is required. The agency must issue a Form 1099-MISC to the landlord because:

• The payment is rent for business use of property.
• The total exceeds $600 for the year.
• The payee is not a corporation (most corporations are exempt from 1099-MISC reporting, with some exceptions).

On the form, the agency reports $24,000 in Box 1 (Rents). The landlord then uses this information when filing their own tax return.

This is one of the best examples of 3 practical examples of 1099-MISC form reporting, because it’s simple: business rent to a noncorporate landlord goes on 1099-MISC.

Example 2: Cash prize to a contest winner (Box 3 – Other income)

Now picture a local radio station running a summer giveaway.

• The station gives a $1,000 cash prize to the winner of a call-in contest.
• The winner is not an employee.
• The prize is not for services performed as a contractor; it’s just a contest win.

Here, the station must issue Form 1099-MISC to the winner, reporting $1,000 in Box 3 (Other income).

This falls squarely into one of the IRS’s favorite examples of 1099-MISC form usage: prizes and awards that are taxable but not wages. It’s not salary, and it’s not self-employment income earned from services. It’s “other income,” and Box 3 is where it lives.

In 2024–2025, this scenario is more common than ever because:

• Brands run constant online giveaways.
• Influencers host sponsored contests.
• Sweepstakes and promotions have moved heavily to digital platforms.

If the total taxable prize or award from a business to a person is $600 or more in a calendar year, this is a strong example of 3 practical examples of 1099-MISC form usage.

Example 3: Legal settlement with non-wage damages (Box 3 – Other income)

Legal settlements are where things get messy fast, but they’re one of the most important examples of 3 practical examples of 1099-MISC form situations.

Imagine this scenario:

• An individual sues a business for non-physical injury claims (for example, discrimination or wrongful termination without physical injury).
• The parties settle out of court for $50,000, paid directly to the plaintiff (not all to the attorney).
• The settlement is not for physical injuries or sickness, and it’s not wages.

In many of these cases, the business (or its insurer) must issue Form 1099-MISC to the plaintiff, reporting the taxable portion of the settlement in Box 3 (Other income).

If part of the settlement is paid directly to the attorney, that portion may be reported in Box 10 (Gross proceeds paid to an attorney) on another 1099-MISC. This is straight from the IRS playbook; see the official instructions for Form 1099-MISC and 1099-NEC here:

• IRS 1099-MISC and 1099-NEC Instructions: https://www.irs.gov/forms-pubs/about-form-1099-misc

This is one of the best examples of 3 practical examples of 1099-MISC form usage because it shows how the form is used beyond simple rent and prizes.

More real examples of 1099-MISC form payments in 2024–2025

Those three core stories are a solid foundation, but let’s go further. To really understand the form, it helps to see several more real examples of 1099-MISC form situations.

Real example: Royalties from a book or digital content (Box 2 – Royalties)

Say you wrote an e-book years ago, and a publisher still sells it online.

• In 2024, the publisher pays you $120 in royalties.
• The payments are for the ongoing use of your intellectual property.

This triggers a Form 1099-MISC from the publisher to you, reporting $120 in Box 2 (Royalties), because:

• Royalties of $10 or more must be reported.
• Royalties are one of the classic examples of 1099-MISC form reporting.

This applies not only to books, but also to:

• Music streaming royalties
• Licensing fees for stock photos
• Royalties from patents or trademarks

As digital content and creator platforms keep growing, royalty payments are a modern, very common example of 1099-MISC form use.

Real example: State tax refund or grant payments (Box 3 or Box 6)

Government agencies also use 1099-MISC.

Suppose a state agency pays you a $900 taxable grant for a research project that is not wages and not self-employment income. Or you receive a taxable state tax refund that must be reported.

In cases like these, the state may send you a Form 1099-MISC, often using Box 3 (Other income). This is one of those quiet examples of 1099-MISC form use that surprises people, because they assume only private businesses send these forms.

You can see how federal and state agencies handle information returns in IRS Publication 1220: https://www.irs.gov/pub/irs-pdf/p1220.pdf

Real example: Crop insurance proceeds to a farmer (Box 9 – Crop insurance proceeds)

If you’re in agriculture, this one matters.

Imagine a farmer whose crops are damaged by severe weather. The farmer has crop insurance through a private insurer.

• The insurer pays the farmer $15,000 in crop insurance proceeds.
• The payment is taxable income to the farmer, subject to specific timing rules.

The insurer issues a Form 1099-MISC, reporting $15,000 in Box 9 (Crop insurance proceeds). This is a textbook example of 1099-MISC form usage in the farming world.

For more background on farm and crop insurance reporting, the IRS provides guidance in Publication 225 (Farmer’s Tax Guide): https://www.irs.gov/publications/p225

Real example: Attorney receives gross proceeds (Box 10 – Gross proceeds paid to an attorney)

Let’s return briefly to the legal world with another angle.

Suppose a business settles a lawsuit and writes a check for $100,000 payable to the plaintiff’s attorney, who then distributes funds to the client.

• The attorney is not an employee of the business.
• The payment represents gross proceeds from a legal settlement.

The business issues Form 1099-MISC to the attorney, reporting $100,000 in Box 10 (Gross proceeds paid to an attorney). This is not reporting the attorney’s taxable income; it’s reporting the gross amount paid.

This is one of the best examples of 1099-MISC form reporting that often confuses people, because it’s not about services like a typical contractor payment (which would go on Form 1099-NEC). It’s about gross proceeds.

Real example: Medical and health care payments (Box 6 – Medical and health care payments)

Here’s a scenario straight out of 2024’s health-care reality.

• A workers’ compensation insurer pays $5,000 directly to a physical therapy clinic for treatment of a covered worker.
• The clinic is an incorporated medical practice.

Even though the clinic is a corporation, the insurer generally must report medical and health care payments of $600 or more in a year on Form 1099-MISC, Box 6.

This is a very common example of 1099-MISC form use that keeps popping up as health costs rise and more claims flow through insurers and TPAs (third-party administrators).

For broader health tax topics, the IRS maintains health-related guidance here: https://www.irs.gov/affordable-care-act

1099-MISC vs 1099-NEC: why these examples matter

If you’ve noticed a pattern in these examples of 3 practical examples of 1099-MISC form usage, you’re already ahead of many filers.

Form 1099-NEC is for nonemployee compensation — payments for services, like freelancers, consultants, and independent contractors.

Form 1099-MISC, by contrast, is now the home for:

• Rents
• Royalties
• Prizes and awards
• Other taxable income that isn’t wages or self-employment pay
• Medical and health care payments
• Crop insurance proceeds
• Certain legal payments

The IRS split 1099-NEC off from 1099-MISC starting in 2020 to make deadlines clearer and reduce confusion. But in practice, people still mix them up.

That’s why walking through real examples of 3 practical examples of 1099-MISC form scenarios is so helpful: when you see rent checks, prize money, royalties, or settlement checks, your brain should start whispering, “This smells like 1099-MISC, not 1099-NEC.”

Common mistakes people make with 1099-MISC examples

Even with good real examples, a few traps show up again and again.

Treating contractor payments as 1099-MISC instead of 1099-NEC

If you pay a graphic designer, virtual assistant, or web developer for services, that’s generally Form 1099-NEC, not 1099-MISC.

A lot of older blog posts still use outdated examples of 1099-MISC form usage that include contractor payments. That changed when 1099-NEC came back into play. For current rules, always check the latest IRS guidance, especially the instructions for Forms 1099-MISC and 1099-NEC.

Sending 1099-MISC to corporations that don’t need them

Many payers still send 1099-MISC forms to every vendor “just to be safe.” That sounds cautious, but it creates confusion and wasted time.

In many cases, payments to C corporations and S corporations are not reportable on 1099-MISC, with exceptions like:

• Medical and health care payments (Box 6)
• Gross proceeds to attorneys (Box 10)

This is why getting a completed Form W-9 from vendors is so important. It tells you whether the payee is a corporation and how they’re classified for tax purposes.

You can find the current Form W-9 here: https://www.irs.gov/forms-pubs/about-form-w-9

Ignoring the \(600 threshold (or the \)10 royalty rule)

Most 1099-MISC examples, including the examples of 3 practical examples of 1099-MISC form scenarios we’ve covered, assume you’ve hit the reporting threshold:

• $600 for rents, prizes, other income, medical payments, etc.
• $10 for royalties.

Below those amounts, you typically don’t file 1099-MISC, though the income can still be taxable to the recipient.

FAQ: Real examples of 1099-MISC form questions people actually ask

What are some common examples of 1099-MISC form payments?

Common examples include:

• Rent paid to a noncorporate landlord for business property
• Royalties of $10 or more from books, music, or digital content
• Cash prizes or awards of $600 or more that are not wages
• Legal settlements that are taxable but not wages
• Medical and health care payments of $600 or more to providers
• Crop insurance proceeds paid to farmers
• Gross proceeds paid to attorneys

These are the best examples of 3 practical examples of 1099-MISC form scenarios you’ll see in everyday business.

Can you give an example of when I should not use 1099-MISC?

Yes. If you pay an independent contractor for services, such as a freelance programmer or a consultant, and you meet the $600 threshold, you generally use Form 1099-NEC, not 1099-MISC. That’s one of the most important distinctions when looking at examples of 1099 reporting.

Do individuals ever have to file 1099-MISC, or is it only businesses?

Most 1099-MISC filers are businesses, nonprofits, or government entities. However, an individual might have to file 1099-MISC if they make qualifying payments in the course of a trade or business — for example, if you own rental property as a business and pay another individual rent or certain other reportable amounts.

Purely personal payments (like paying your roommate your share of the rent, or giving a friend a gift) are not 1099-MISC situations.

If I get a 1099-MISC, does that always mean I owe more tax?

Not always, but it does mean the IRS got a copy and expects to see that income addressed on your return. Sometimes the income may already be included in other totals, or part of it may not be taxable (for example, certain portions of a settlement). When in doubt, it’s wise to talk with a tax professional or review IRS publications related to your situation.

Where can I read the official IRS rules behind these examples?

For official guidance backing up all these real examples of 1099-MISC form usage, start with:

• IRS About Form 1099-MISC: https://www.irs.gov/forms-pubs/about-form-1099-misc
• IRS General Instructions for Certain Information Returns: https://www.irs.gov/forms-pubs/about-publication-1220
• IRS About Form W-9: https://www.irs.gov/forms-pubs/about-form-w-9

These sources show the boxes, thresholds, and definitions behind the examples we’ve walked through.

If you keep these stories in mind — the landlord with rent, the contest winner with a cash prize, the plaintiff with a settlement, the author with royalties, the farmer with crop insurance, the clinic with medical payments, and the attorney with gross proceeds — you’ll have a solid mental library of examples of 3 practical examples of 1099-MISC form scenarios. That’s usually all it takes to stop guessing and start filing with confidence.