Have question regarding Foreign Accounts - What is the Exchange Rate should I consider and what forms should I fill for the Interest that I earned

[anurag46]

Hi,

I have question regarding Foreign Accounts :

a) What is the Exchange Rate should I consider for 2021 and what forms should I fill for the Interest that I have earned.

b) I am a joint holder in some of the account with my mother. How does the interest play in that case - Should we divide the Interest between me and my parent as she is also the joint owner.

c) Do I get some benefits if I have already paid taxes in India.

Thanks,

Anurag.

[LoganathanB]

You use the yearly average of foreign currencies from the IRS for calculating the dollar amounts.

You enter the interest from India in Schedule B as bank interest.

You can split the interest depending on the number of people if it is a joint account.

Yes, you can take credit for the taxes paid in India after including the income in the tax return.

• Open your tax return
• Search for foreign tax credit
• Click on Jump to
• Enter the information

[y6t]

How do we adjust for depreciation in principal amount for a deposit in a foreign currency. E.g. if I deposit 100 INR as principal and I get 10INR as interest. However, the USD-INR exchange in the year of deposit was 70INR = 1USD and in the tax year it changed to 80INR=1USD.  In other words, the principal itself reduced in value due to exchange rate change. How do we account for that?

[HopeS]

Income and expense transactions must be reported in U.S. dollars on U.S. tax returns. Review a chart of yearly average currency exchange rates:

Average Currency Exchange Rates

@y6t 

[fanfare]

instead of an average you can use the currency exchange rate on the day of your transactions.

Inflation is reducing the value of everybody's money. IRS doesn't care about that.