The IRS states it has no official exchange rate and generally accepts any exchange rate that is used consistently, while publishing its own yearly average currency exchange rates for translating foreign income received evenly throughout the year into US dollars; converting requires dividing the foreign-currency amount by the applicable yearly average rate.
What irs yearly average exchange rate means
The IRS's yearly average currency exchange rates page states that if income is received evenly throughout the tax year, a taxpayer may translate the foreign currency using the yearly average exchange rate for that year, and gives the conversion rule: divide the foreign currency amount by the applicable rate to get US dollars, or multiply a dollar amount by the rate to get foreign currency. This yearly-average table serves the tax-return translation of evenly received income; account balances reported on the FBAR or Form 8938 instead use the Treasury's separate year-end exchange rate, not this table, so the two IRS-adjacent processes should not share one rate.
| 2024 Euro Zone yearly average | 0.924 EUR per $1 |
|---|---|
| Foreign wages received evenly in 2024 | €50,000 |
| Translated to US dollars | $54,112.55 |
| Conversion direction | divide foreign amount by the rate |
| FBAR/Form 8938 balances | use a separate year-end rate |
How does the IRS yearly average exchange rate work for reporting foreign income?: worked example
The IRS's listed 2024 yearly average rate for the Euro Zone was 0.924 euro per US dollar. Wages of €50,000 received evenly across 2024 translate to US dollars by dividing: €50,000 divided by 0.924 is $54,112.55. A single lump-sum foreign payment received on one date, instead of spread through the year, is generally translated at that date's rate rather than the yearly average.
How to calculate irs yearly average exchange rate
Confirm the tax year and currency, then divide the foreign-currency amount by the IRS's listed yearly average rate for that year and currency to translate income received evenly through the year to US dollars. For income received on a specific date, use that date's rate instead of the annual average.
Use the relevant inputs with these related Calculatort pages: currency conversion tool · currency conversion formula guide · self-employment tax estimator.
Common mistakes
Do not multiply foreign currency by the yearly average rate when converting to dollars - the IRS rule for that direction is division - and do not use the yearly average for a one-time foreign transaction that occurred on a specific date. Do not treat a foreign-currency gain or loss on the underlying transaction, which IRC Section 988 can require separately, as already included in this translation.
Where this calculation stops
The IRS states it has no official exchange rate and accepts other consistently used posted rates, such as a bank's rate. This translation does not determine whether the income is taxable, does not apply a foreign tax credit, and does not replace the year-end rate required for foreign account reporting.
A second worked translation, a different currency and year
The same divide-to-convert rule works for any currency and year in the IRS table. For 2025, the IRS's yearly average lists 0.759 British pounds per US dollar. £40,000 of foreign wages received evenly across 2025 translates by dividing: £40,000 divided by 0.759 is about $52,700.92 - built from the identical rule as the euro example above, applied to a different currency-year pair in the same table.
How the same €50,000 wage figure changes by tax year
| Tax year | IRS EUR per $1 | €50,000 translated to USD |
|---|---|---|
| 2021 | 0.846 | $59,101.66 |
| 2022 | 0.951 | $52,576.24 |
| 2023 | 0.924 | $54,112.55 |
| 2024 | 0.924 | $54,112.55 |
| 2025 | 0.886 | $56,433.41 |
Every row comes from the IRS's yearly average currency exchange rates page. The identical €50,000 wage figure translates to a range spanning more than $6,500 depending only on which tax year's published rate applies - the reason the tax year is part of the label, not an optional detail.
The dispute this guide resolves: yearly average versus the general spot-rate rule
The IRS's broader instruction is narrower than the yearly-average shortcut might suggest: 'In general, use the exchange rate prevailing (i.e., the spot rate) when you receive, pay or accrue the item.' The yearly average is an accepted convenience specifically for income received evenly across the year; a lump-sum foreign payment received on one identified date should be translated using that date's spot rate under the general rule, not the annual average, even though both rates appear on IRS-published pages.
Checking the translation by converting back
To verify $54,112.55, multiply it back by the same 0.924 rate: $54,112.55 times 0.924 returns €50,000.00 (subject to rounding at the cent level), confirming the division was applied correctly and in the right direction. Multiplying instead of dividing on the first pass is a common error the IRS's own instructions warn against for this table, and the reverse check catches it immediately because the wrong-direction result would be off by a factor of roughly the rate squared, not a rounding difference.
Why this table cannot be used for a December 31 account balance
A separate Treasury series governs foreign account balances reported on the FBAR or IRS Form 8938: the Bureau of the Fiscal Service's Treasury Reporting Rates of Exchange, published quarterly, with the December 31 rate used for year-end account-balance reporting. That series answers a different question - what is this balance worth on one specific year-end date - from the yearly average table's question of translating income spread evenly across twelve months, and the two should not be swapped even though both originate from federal sources and both convert foreign currency into US dollars.
What the wrong-direction error actually produces
Multiplying instead of dividing on the euro example shows why the error is easy to catch. €50,000 times 0.924, instead of divided by 0.924, gives $46,200 - a result more than $7,900 lower than the correct $54,112.55, and one that moves in the wrong direction as the rate changes: a smaller euro-per-dollar rate should make the dollar translation larger when dividing correctly, but multiplying makes it smaller instead, the opposite relationship. That reversed sensitivity, more than the single wrong number, is the tell that the direction was applied backward.
Why 2023 and 2024 share the same published rate
The table above shows 2023 and 2024 both listing 0.924 euro per dollar - not a data-entry duplication, but the IRS's own published figures happening to round to the same three decimals for those two years even though the euro's actual daily trading range differed across them. A calculation that needs to distinguish those two tax years by rate alone cannot do so from the yearly-average table; the tax year itself, not just the rate, has to be recorded alongside any dollar figure this table produces. The yen and pound rows in the same table moved in every one of the five listed years, which is why relying on any single currency's pattern to predict another currency's row is not a safe shortcut.
Source and verification
The Internal Revenue Service publishes yearly average currency exchange rates and states the divide-to-convert rule for translating foreign currency received evenly through the year into US dollars. Read the named source. Verify the source date and the controlling statement, agreement, payroll record, or accounting record before relying on the illustrated result.