What are the IRS Safe Harbor Foreign Exchange rates for use on tax return information (not the FBAR)?
You must express the amounts you report on your U.S. tax return in U.S. dollars. Therefore, we must translate foreign currency into U.S. dollars, if you receive income or pay expenses in a foreign currency. The IRS has Safe Harbor rates (see the link below) which they agree not to dispute and which are generally of benefit to the taxpayer. In most instances, this is the rate I will use for tax returns, so it is best to provide transactional amounts in the original currency. If you wish to use your own rate, you must provide documentation from an acknowledged rate source (Oonda, X-rates, etc.). In general, use the exchange rate prevailing (i.e., the spot rate). You can also use a monthly or annual average exchange rate from a valid site (such as oonda or x-rates). You should never use an approximation of what you think the rate probably was during the period.
IRS Safe Harbor Foreign Exchange rates
What is the exchange rate I should use for the FBAR (Form 114)?
The IRS requires a specific rate for the FBAR (Form 114) and Form 8938 (which is the individual form associated with FATCA). For 2022, this rate is 19.546 for MXN, 0.936 for the Euro, 0.83 for UK pound, and 1.354 for the Canadian dollar. These and other rates are found on-line: https://fiscaldata.treasury.gov/datasets/treasury-reporting-rates-exchange/treasury-reporting-rates-of-exchange.
What is the pass/access code formula to open my file?
The IRS is getting more serious about passcodes and is now requiring that we use “strong” passcodes with at least 20 digits that include both letter cases, numbers, and special characters. We can no longer use formulaic passcodes. For security, I will send documents via email, but the passcode will be sent by a different media such as WhatsApp (always encrypted) or text. So, please make sure I have your cell phone number.
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