topic Foreign account depreciation due to exchange rate in Deductions & credits

Foreign account depreciation due to exchange rate

rahulbhaskar — Fri, 06 Nov 2020 20:18:22 GMT

Hi,

Assume I have $100 in a foreign account on Year 1 and earn $5 as interest. I'll pay tax in the US on the $5 earned. The new principal is now $105

Now, in year 2, assume USD strengthens and my principal in dollar terms drops to $103. The interest this year is again $5 so I will pay tax on $5.

Can I claim any deductions in year 2 due to principal value dropping from $105 to $103?

Critter-3 — Fri, 06 Nov 2020 20:19:39 GMT

Can I claim any deductions in year 2 due to principal value dropping from $105 to $103? NO

PressburgTax — Wed, 11 Nov 2020 04:48:41 GMT

No, foreign currency exchange loss in this case would be a personal loss - so no deduction on your income tax return.