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Payment Procedures

Before engaging an Independent Contractor, ensure that this status has received approval from HR Compensation by completing and submitting the OnBase Worker Classification Form.

Determining residency

Tax regulations for nonresidents vary significantly from those applying to U.S. residents and U.S. citizens. To assure compliance with tax law, Northwestern must determine the residency status of the contractor before engaging him or her. This determination is made by ascertaining citizenship for U.S. Citizens or by applying either the Green Card Test or the Substantial Presence Test for non-citizens.

Citizenship

An individual born in the United States can be considered a citizen. All others should pass one of the below tests.

Green Card Test

An individual is U.S. resident if he or she has been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. Evidence of the grant of this privilege is the possession by the candidate of a Permanent Resident Card or a Resident Alien registration card, known as a green card.

Substantial Presence Test

To meet this test, the individual must be physically present in the United States as indicated below (one day is counted if the person is present in the U.S. at any time during that day):

  • at least 31 days of the current calendar year, and
  • at least 183 days consisting of the days present in the current calendar year, plus 33.3 percent of days present in the prior calendar year, plus 16.6 percent of the days present in the next prior calendar year.

 

Final determination

U.S. Resident

An individual who is a citizen of the U.S. or who satisfies the Green Card or the Substantial Presence Test is a resident and may be paid according to the U.S. Resident procedures.

Nonresident Alien

 A non-U.S citizen who satisfies neither the Green Card nor the Substantial Presence Test is a nonresident, sometimes called a nonresident alien. Such an individual must complete immigration requirements and tax status forms in order to be paid as an independent contractor according to Nonresident procedures.