I am a nonresident alien, currently living in the U.S.
In 2016, we (my wife and I) rented out one of the rooms of our apartment on AirBnB for a few months (earning about $1400 in total). We had the money sent to my (U.S.) checking account by bank transfer.
This is the same account that I use for my everyday life, where I deposit my salary and keep my savings. This account generated about $150 of interest in 2016.
Now is the time to file my taxes, and one line in the tax rules caught my attention:
Nonresident Aliens who receive interest income from deposits with a U.S. bank, savings & loan institution, credit union, or insurance company, or who receive Portfolio Interest (described in Publication 519, U.S. Tax Guide for Aliens) are exempt from taxation on such interest income as long as such interest income is not effectively connected with a United States trade or business.
What do these terms mean precisely? Does occasional renting on AirBnB count as "a United States trade or business", and do occasional bank transfers into an account make it "effectively connected" to that trade? And even if the account is connected, what about the interest income it generates? I feel that it does not really have anything to do with the room rental! the vast majority of it comes from my savings and ultimately from my salary (I work in academia), with maybe only 5% being generated by the money earned from AirBnB.
(Any responses before the tax deadline - April 18 - will be especially appreciated!)