My foreign social security pension is paid periodically through the year in dollars into my US bank.

[ipc1]

The paying agent is Citibank Europe plc. The dollars banked are not the same as those calculated using the yearly average currency exchange rate from irs.gov along with the foreign currency amount from the plan administrator.

Which amount is the correct one to use on Form 1040, dollars banked or the amount using the exchange rate?

[DaveF1006]

If there is a difference between the money that was deposited into your account and the exchange rate, there may have been foreign taxes deducted from your social security.  If so, then the amount may reflect what the amount was before the taxes were withdrawn.  If this is the case, then you would report the amount that is calculated using the exchange rate.

Foreign social security income is generally taxable on your US return, unless you are covered by a "Totalization Agreement".  You can find a list of the countries where the US has these agreements HERE. If your country is listed here, you may not need to report your social security.

If no foreign taxes were withheld from your social security, then report the money deposited into your account but first, check to see if you are covered by the totalization agreement I mention above.

[Edited 02/17/25|3:43 PM PST]

@ipc1 

[ipc1]

DaveF1006
There was no foreign tax taxes deducted from the social security. The untaxed amount went to the paying agent to put it through their currency exchange process for deposit into the US bank. Curious as to why you consider this to be more suitable than the alternative of using the amount calculated using the yearly average currency exchange rate from irs.gov?

[DaveF1006]

There are a few reasons why the deposit for your social security foreign pension might differ from the expected amount based on the average exchange rate.

1. Exchange Rate Fluctuations: Exchange rates can vary daily, and the rate used for your deposit might differ from the average rate you expected. The rate applied could be the spot rate on the day of the transaction.
2. Bank Fees and Charges: Financial institutions often charge fees for currency conversion, which can affect the final amount deposited into your account.
3. Timing of Conversion: The timing of the currency conversion can impact the amount received. If the conversion was done on a day when the exchange rate was less favorable, the deposit amount would be lower.
4. Withholding Taxes: Some countries impose withholding taxes on pension payments, which can reduce the amount you receive.
5. Currency Exchange Policies: Different banks and financial institutions may use.

These are possible reasons why the difference occurred. Without knowing the specific reason, my advice will stand and that is to use the amount that was deposited into your bank. 

[ipc1]

DaveF1006

The foreign social security amount, converted to US dollars using the irs yearly average currency exchange rate is in my case independent of the five factors that you list - because both items are fixed for the year. The alternative is clearly subject to some of the variabilities listed. What is it about this method that makes it the choice to use on Form 1040?

[DaveF1006]

 To clarify, why do you think there is a difference between money banked and the average conversion rate for the year?  

@ipc1