Yearly Average Currency Exchange Rates

When preparing your U.S. tax return, income earned and expenses paid in foreign currencies must generally be converted to U.S. dollars using the appropriate exchange rate. 

There is no fixed exchange rate used by the IRS, and they will generally accept any posted exchange rate that is used consistently. This means that you should use the exchange rate that is appropriate for the transaction you are looking for - if you are reporting something that happened on a single day, use the exchange rate for that day. If you are reporting income earned evenly through the year, the yearly average exchange rate may be more appropriate.

The IRS lists the following yearly average rates on its website, located here: http://www.irs.gov/Individuals/International-Taxpayers/Yearly-Average-Currency-Exchange-Rates. To use the table, simply divide the foreign currency by the listed exchange rate to arrive at the appropriate U.S. dollar amount. To work in the opposite direction, multiply the amount of U.S. dollars by the number below.