# Forex rates and converting to US dollars for IRS tax return



## worldvagabond3920

Hello. I am an American who worked in Korea in 2011. I know that as a US citizen, I have to file my worldwide income. I worked both in the US and in Asia for 2011. I have no problem with my income accrued from the US, but have problems with my income accrued from Asia due to fluxuating exchange rates. My problem is with determining the exact amount of US dollars that I should declare to the IRS. I got paid in Korean won, once per month, in Korea. As you know, currency exchange rates change constantly. I would like to know exactly how to determine how much USD I should declare with respect to my income accrued in Asia. I have tried the many of the best historical forex sites on the web, but the problem is that many of them give quite different exchange rates for specific days. 

For example for 10 August 2011 one site gives:
1 US Dollar (USD) = 1083.89238 Korean Won (KRW)

But for another site:
Wednesday 10 August 2011	1 USD =	1017.4704 KRW

Likewise for other sites, they can give quite different exchange rates.

Which is the best site to use for historical exchange rates for the IRS?

I have searched the IRS for these questions, and the best thing I can find from the IRS is the following:

They say, "Use the exchange rate prevailing when you receive, pay, or accrue the item. If there is more than one exchange rate, use the one that most properly reflects your income. You can generally get exchange rates from banks and U.S. Embassies."

I was paid on the 10th of every month for the previous month's work, and so have been researching historical forex data for every month, and then converting to US dollars. 

Also, I would like to know if I should convert my pay for every month into US dollars, or just convert my yearly salary and to use the exchange rate for the last day that I worked for the whole year to USD. Also, going back to the forex websites that I mentioned, could I take all of their data and just average the data from the different websites, or should I only take one forex website's data?

Any and all help is appreciated.

Thanks


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## Bevdeforges

Don't make a bigger issue out of this than it is. The IRS exchange rate tables don't list average annual rates for Korea - but they do give guidance regarding what published rates lists they find acceptable here: Foreign Currency and Currency Exchange Rates (use any of the links under "Government Resources" or "External resources" near the bottom of the page)

Ideally, you are supposed to use the exchange rate (just pick one from the listings given and use that one consistently) for the date that you received the income. However, the IRS also allows you to use an "annual average" rate - which you could calculate for yourself simply by taking the rates for the 10th of the month (or the end of the month, or any consistent date during the month) and averaging them.

They aren't going to question what rate you use unless it makes a huge difference in the amount you report. And even then, if you're subject to the FEIE and are excluding your earned income, it probably doesn't really matter if ultimately you don't owe any taxes. You could pick the rate mid-year and use that for all your calculations if you like. 
Cheers,
Bev


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