Which exchange rate to use on taxes

First off, congratulations on being one of the rare U. It sounds like you are hoping to make use of the general rule that U. For U. Most people use the yearly average exchange rate between the U. Dollars page of its website. Note that there is no "official" exchange rate you are obliged to use for this calculation. Any posted, "consistently used" exchange rate—like those utilized by major banks—is acceptable.

There are situations in which it is appropriate to use an exchange rate other than the yearly average rate. For example, if you had income that was the result of a one-time event, like the sale of your house, you can use the actual exchange rate for that exact day in calculating that particular portion of your total income.

Detailed historical exchange rate information is available on the Treasury Reporting Rates of Exchange page of the Treasury Department's website. You need to use the exchange rate in effect for the tax year in question, not the rate at the time you're actually filing your tax return most people file their return before April 15 of the calendar year following the tax year for which they are figuring their taxes.

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With Expat Tax Professionals, we make filing a snap anywhere in the world. Let's Get Started. Share this article. Also, I started to rent a property located in New Zealand. Which rate is recommended by the IRS?

American expats earn income and incur expenses in multiple foreign countries. However, U. Most of the time Americans living abroad receive a foreign income like wages and salaries evenly throughout the year. In this situation American expats can use the yearly average exchange rate to translate the foreign currency to U. There are some unique circumstances. For example, if a specific transaction happened on a certain day, then American expats can use the rate for that day.

For example, a sale of business or rental property might be one of these cases.