(including taxes), that you receive, pay, or accrue in a foreign currency. On its “Foreign Currency and Currency Exchange Rates” page, the IRS advises taxpayers to use whatever exchange rate applies on the date of a particular transaction.Īccording to the IRS, “ you must immediately translate into dollars all items of income, expense, etc. IRS guidelines for currency conversion seem somewhat confusing. That seems simple enough, but where do you find the correct exchange rate? How do you know an asset’s value? Are there approved IRS currency exchange rates you can use? To calculate the US dollar value of foreign assets, take the foreign amount and multiply it by the appropriate currency exchange rate. Or, if you own a Chinese-based bank account, that bank’s primary economic environment is China, so its functional currency would also be CNY. If you live and work in China, for instance, it’s likely your wages are paid in Chinese Yuan (CNY). “Functional currency” is the currency of the primary economic environment in which an entity operates. Your global income must be reported in US Dollars (USD), which means all foreign-sourced income (and expenses), regardless of type, must be converted from its “functional currency” to USD. This means that any foreign-earned salary, as well as foreign-earned interest, dividends, pensions, capital gains on sales of real estate or investments, annuities, or IRA distributions, are all subject to the long arm of Uncle Sam’s tax collector. If you are a US citizen living abroad, you are required to file your annual taxes based on your worldwide income, not merely income earned in the US. Additional Filing Considerations – Form 8938.Filing the FBAR and Currency Exchange Rates.Valuing Other Foreign Assets Not Held in Financial Accounts.
0 kommentar(er)
