FTC (Foreign Tax Credit) and exchange rates to use

[Anonymous]

Looking for some guidance on proper exchange rate (Fx) and date to use when preparing my 2023 US tax return which includes Form 1116 calculations for Foreign Tax Credits (FTC).

2023 US tax return is to report [2023 US based Pension, Interest, Dividends, and Cap gains] that were taxed in Japan, since I am a US retired Expat living in Japan. 

Thoughts:

-When calculating the FTC, I need to report the amount of Foreign tax paid on the amount above in (Form 1116 Part 2 block 8).

—Japan taxes on Calendar year income, same as USA.

—Taxable items are from 2023.

—2023 Japan tax return filing due March 15, 2024. [Filed]

—2023 Japan Natl tax (ie: FED) payment due April 24, 2024.

—2023 Japan Local tax (ie: STATE) payment due June 30, 2024.

Can I use the [IRS website (Yen/US$) 2023 YR-End AVG Fx] to convert the [2023 Japan Income Taxes paid] for use in Calculating Form 1116 Foreign taxes paid?

Respectfully,

CEM2

[MarilynG1]

In the Foreign Tax Credit section, you will report both the amount and type of Foreign Income that was taxed, and the amount of Foreign Tax paid on that income.

Each type of income will have its own Form 1116.

Here's more detailed info on income types and Claiming the Foreign Tax Credit.

Yes, you can use the IRS website for calculating foreign currency exchange values.