There are a few choices for collaborating in tfs:
Domain: This is the easiest to setup, user-wise. All you have to do is be a member of the domain and a member in a team project.
You have already said that you do not want this option.
Workgroup This requires you setting up the TFS server as a work group and then creating users in that workgroup that represent your team members. You then add them to your tfs team project(s). The pain part comes from you having to make sure that the username and password your team members log in with matches the work group username and password.
This is probably going to be your best bet unless you want to subscribe to visual studio online.
Visual Studio Online
This is almost as easy as the domain setup but isn't free. But connecting remotely is a good option. Plus if you are doing any cloud work it integrates nicely.
This link (http://msdn.microsoft.com/en-us/library/ms252507(v=vs.100).aspx) from Microsoft describes various domain \ work group combos. The one I describe above refers to the one where everything is in a workgroup.
Local user accounts must be created on the Team Foundation server for
all users requiring access to the server. Local user accounts must be
added to Team Foundation Server server-level and project-level groups
so that the users are authorized on the Team Foundation server. When
connecting from a Team Foundation client, such as Team Explorer, in
the workgroup, the client user account credentials must match those of
the server, or the user will be prompted for a user name and password
for an account on the Team Foundation Server.
