Tax Filing - Exchange Rates
#16
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Re: Tax Filing - Exchange Rates
As I mentioned in another thread, or maybe this thread higher up, with increasing age my ability to wrap my head around simple arithmetic seems to be escaping me.
So the IRS Yearly Average Exchange Rate is $1 = £0.750. This makes £1 = $1.3333(etc) ??
So the IRS Yearly Average Exchange Rate is $1 = £0.750. This makes £1 = $1.3333(etc) ??
#17
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Re: Tax Filing - Exchange Rates
correct, to switch between the two rates just do the inverse. 1/0.75 =1.3333 and 1/1.3333 = 0.75
#18
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#19
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Posts: 254
Re: Tax Filing - Exchange Rates
If the figures in this site are accurate and I'm reading them correctly, it seems the advantage spoken of in this thread has disappeared in 2018.
https://www.ofx.com/en-us/forex-news...average-rates/
Year IRS Figure from site
2015 1.4684 1.5285
2016 1.2987 1.3557
2017 1.2376 1.2886
2018 1.3333 1.3348
https://www.ofx.com/en-us/forex-news...average-rates/
Year IRS Figure from site
2015 1.4684 1.5285
2016 1.2987 1.3557
2017 1.2376 1.2886
2018 1.3333 1.3348
#20
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Re: Tax Filing - Exchange Rates
If the figures in this site are accurate and I'm reading them correctly, it seems the advantage spoken of in this thread has disappeared in 2018.
https://www.ofx.com/en-us/forex-news...average-rates/
Year IRS Figure from site
2015 1.4684 1.5285
2016 1.2987 1.3557
2017 1.2376 1.2886
2018 1.3333 1.3348
https://www.ofx.com/en-us/forex-news...average-rates/
Year IRS Figure from site
2015 1.4684 1.5285
2016 1.2987 1.3557
2017 1.2376 1.2886
2018 1.3333 1.3348
i can’t figure out how to attach a screen shot from my iPad.
#21
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Re: Tax Filing - Exchange Rates
from my laptop...
Date (GMT)Rate**
Average
December 31, 2017 0.776691
December 31, 2018 0.750148
**1 UNIT of USD = X UNITS of GBP
Average
December 31, 2017 0.776691
December 31, 2018 0.750148
**1 UNIT of USD = X UNITS of GBP
Last edited by durham_lad; Feb 8th 2019 at 9:46 am.
#22
Re: Tax Filing - Exchange Rates
If the figures in this site are accurate and I'm reading them correctly, it seems the advantage spoken of in this thread has disappeared in 2018.
https://www.ofx.com/en-us/forex-news...average-rates/
Year IRS Figure from site
2015 1.4684 1.5285
2016 1.2987 1.3557
2017 1.2376 1.2886
2018 1.3333 1.3348
https://www.ofx.com/en-us/forex-news...average-rates/
Year IRS Figure from site
2015 1.4684 1.5285
2016 1.2987 1.3557
2017 1.2376 1.2886
2018 1.3333 1.3348
#23
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Joined: Sep 2013
Posts: 120
Re: Tax Filing - Exchange Rates
I haven't been following rates by the day.....but has GBP to USD ever hit 1.33 for any length of time in 2018? I'm thinking it has been below 1.30 for most of the year. Where do they get these rates from?
#25
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Posts: 120
Re: Tax Filing - Exchange Rates
OK. I notice that the US Treasury rate is more favorable at 1.28.
#26
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Re: Tax Filing - Exchange Rates
This IRS published average can be used for regular payments such as pensions, dividends, interest etc. One off payments such as the sale of stocks should use the rate on the day of sale.
#28
Re: Tax Filing - Exchange Rates
I'll pop my question onto the end of this thread.
Brit-born, now US citizen and resident. I'm used to filing FBAR (20 years) and the newer form, 8938, with my IRS taxes since FATCA came in. The sterling exchange rate I have used for this has been the one found on the US treasury site at fiscal.treasury.gov. Frankly, as I have been reporting on monies in a bank account and a pension that is thus far unclaimed, all it is is an indication to the IRS and US Treasury of the approximate amounts in the accounts, on the grounds that this fluctuates on a minute-by-minute basis with share prices and currency fluctuations. At this point I am not paying any actual tax on this money.
However, this year, I reach 60, and it is now real money that is plopping into my account in the UK on a monthly basis. I see from earlier in the thread that Durham Lad keeps a spreadsheet of GBP deposits with the actual USD exchange rate on the day of the deposit taken from xe.com, this is what I was thinking of doing. Then later in the thread there is talk of using a broad-brush annual exchange rate to file taxes. Is this allowed? Isn't the 'proper' way to do it to take the exchange rate on the day? And also is xe.com an IRS approved source of the exchange rate? What about oanda.com?
Please, some advice from the wise ones on this site... and what is everyone else doing? Thank you.
Brit-born, now US citizen and resident. I'm used to filing FBAR (20 years) and the newer form, 8938, with my IRS taxes since FATCA came in. The sterling exchange rate I have used for this has been the one found on the US treasury site at fiscal.treasury.gov. Frankly, as I have been reporting on monies in a bank account and a pension that is thus far unclaimed, all it is is an indication to the IRS and US Treasury of the approximate amounts in the accounts, on the grounds that this fluctuates on a minute-by-minute basis with share prices and currency fluctuations. At this point I am not paying any actual tax on this money.
However, this year, I reach 60, and it is now real money that is plopping into my account in the UK on a monthly basis. I see from earlier in the thread that Durham Lad keeps a spreadsheet of GBP deposits with the actual USD exchange rate on the day of the deposit taken from xe.com, this is what I was thinking of doing. Then later in the thread there is talk of using a broad-brush annual exchange rate to file taxes. Is this allowed? Isn't the 'proper' way to do it to take the exchange rate on the day? And also is xe.com an IRS approved source of the exchange rate? What about oanda.com?
Please, some advice from the wise ones on this site... and what is everyone else doing? Thank you.
#29
Re: Tax Filing - Exchange Rates
If you receive regular payments, which your pension if paid monthly, weekly etc would be, you can use an average rate. The IRS publishes an unofficial average rate and I have used this since 2007 to change my UK income in dollars. I keep a record of what that average rate was and the date I obtained it from the IRS web site in case I'm ever audited. So far no problems at all.
ETA - I just looked up the IRS exchange rate page to copy the part about using average rates and it is no longer there. The page has been changed to using the rate on the day it now says:-
The part about spot rate I take issue with because no-one gets spot rate. The only people I know who give spot rate is transferwise.com, but they deduct a fee so in practical terms you receive less dollars than spot rate would give.
ETA - I just looked up the IRS exchange rate page to copy the part about using average rates and it is no longer there. The page has been changed to using the rate on the day it now says:-
you must translate foreign currency into U.S. dollars if you receive income or pay expenses in a foreign currency. In general, use the exchange rate prevailing (i.e., the spot rate) when you receive, pay or accrue the item.
Last edited by lansbury; Mar 15th 2019 at 6:21 pm.
#30
Re: Tax Filing - Exchange Rates
Thanks for your reply lansbury
'spot rate' well yes, exactly, who's going to give me that rate if I wanted to bring it over to the US?
My pension is going into a UK bank account as the provider will not send it to a US account. In actuality, I am going to leave it in that account and use it as cash when I return to England for holidays. If it was being sent to a US account presumably a US$ amount would be deposited and I could use the 'actual' US$ amount that I get for my tax reporting.... my head is starting to hurt.
I'm just trying to do the right thing, not pay more in taxes than I need to and not fall foul of the IRS.
'spot rate' well yes, exactly, who's going to give me that rate if I wanted to bring it over to the US?
My pension is going into a UK bank account as the provider will not send it to a US account. In actuality, I am going to leave it in that account and use it as cash when I return to England for holidays. If it was being sent to a US account presumably a US$ amount would be deposited and I could use the 'actual' US$ amount that I get for my tax reporting.... my head is starting to hurt.
I'm just trying to do the right thing, not pay more in taxes than I need to and not fall foul of the IRS.