The compensation is not exempt from U.S. tax if the contractor is a U.S. resident. Discover essential steps for safely paying international contractors.Our guide simplifies compliance, currency, payment methods, contracts, and more. Use the steps below to engage and pay your Nonresident Independent Contractor. You can also read about other processes for nonresident contractors. The first step in filling out a 1099 form for foreign contractors is to gather all the necessary information from the contractor. A 1099 form is used to report various types of income, such as payments made to independent contractors. Unless otherwise exempt from required withholdings, the system is required to withhold certain deductions from wage payments. APPLICATION: Please complete and submit two copies of form BCA 13.15 to apply for an Authority to Transact Business in Illinois. Report any amount of federal income tax withheld under the backup withholding rules (Form 1099MISC or Form 1099NEC).