Posted by forex at 8:14 AM
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1. Find out the amount of taxable interest, in the original foreign currency, from your overseas bank account or investment. Depending on the institution, you may have received a Form 1099-INT if you received more than $10 in interest. If you did not receive a Form 1099-INT, either your foreign lending institution didn't send one or you made less than $10 in interest.
2. Look up the exchange rate from the currency of your foreign country to the United States dollar on December 31 of the year in which the taxes were accrued. This is the date the IRS requires you to use when converting money from foreign currency to US currency. A number of sites, like OandA and X-Rates (see Resources), have this information readily available.
3. Convert your foreign interest to United States dollars using the information obtained in Step 2. OandA has a currency conversion calculator with which you can convert an amount of money using the exchange rate on a specified day. Alternatively, multiply the exchange rate, expressed as U.S. dollars per unit of foreign currency, by the amount of foreign currency, to obtain the equivalent in U.S. dollars.
4. Write down the number you got in Step 3 on line 8a of your IRS Form 1040.