Which exchange rate do I use to convert foreign balances for these forms?
Use the U.S. Treasury's year-end exchange rate (the Treasury Reporting Rates of Exchange for December 31) to convert maximum account balances to U.S. dollars for the FBAR and Form 8938. You apply that single year-end rate to each account's highest local-currency balance during the year — you don't hunt for the rate on the exact day the peak occurred. If Treasury doesn't publish a rate for a particular currency, a reliable published rate is acceptable as long as you're consistent. For income items reported on your tax return — interest, dividends, capital gains — you generally convert at the rate on the date of the transaction, or an average annual rate where that's permitted. Keep a simple record of the rate you used and where it came from. Converting at the right rate prevents you from accidentally understating a balance and tripping a threshold.
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