Foreign Currency Calculations for Tax Forms - How do you do it?

Ok, so one day this may apply to me and I'd like to know how you account for your UK income on a USA tax form.  What calculator do you use? How do you account for discrepancies that arise as a result of the time lapsed between actually doing your taxes and the IRS receiving your taxes.  How do you translate £ to $ ?

The IRS sets yearly average exchange rates. 

For 2012 for the pound, it's .656
So  £ / .656 = $

See the table here:

http://www.irs.gov/Individuals/International-Taxpayers/Yearly-Average-Currency-Exchange-Rates

The Internal Revenue Service has no official exchange rate. Generally, it accepts any posted exchange rate that is used consistently.

When valuing currency of a foreign country that uses multiple exchange rates, use the rate that applies to your specific facts and circumstances. For example, if you have a single transaction such as the sale of a business that occurred on a single day, use the exchange rate for that day. However, if you receive income evenly throughout the tax year, you may translate the foreign currency to U.S. dollars using the yearly average currency exchange rate for the tax year.

Thanks!  That shouldn't be too hard then. 

I use a spreadsheet, and on each day that my UK pension and UK interest from my savings account appear in my bank account I look up the exchange rate for the day on XE.com (it has historical data as well as well as current exchange rate).

I then report the $ totals for the year on my tax forms.

Looks like the IRS published average mentioned above should be even simpler

Edited to add:

I just compared 2012 for myself, and using the IRS posted average instead of calculating each month gave a $ conversion $200 less.  That would have resulted in less taxes for me    Thanks for the tip, I may well switch to that method from now on.

I use a spreadsheet, and on each day that my UK pension and UK interest from my savings account appear in my bank account I look up the exchange rate for the day on XE.com (it has historical data as well as well as current exchange rate).

I then report the $ totals for the year on my tax forms.

Looks like the IRS published average mentioned above should be even simpler

Edited to add:

I just compared 2012 for myself, and using the IRS posted average instead of calculating each month gave a $ conversion $200 less.  That would have resulted in less taxes for me    Thanks for the tip, I may well switch to that method from now on.

If you don't mind doing the spreadsheet and finding the conversion rate each time you get paid, you might be able to compare the spreadsheet's amount with the IRS yearly conversion average.... one way might work better than the other depending on how the dollar does and how the IRS figures their rate.    An extra hassle, though.... might not be worth the time and energy. 

If you don't mind doing the spreadsheet and finding the conversion rate each time you get paid, you might be able to compare the spreadsheet's amount with the IRS yearly conversion average.... one way might work better than the other depending on how the dollar does and how the IRS figures their rate.    An extra hassle, though.... might not be worth the time and energy. 

I think we cross-posted - see my edit above on my post.

I just checked my previous 3 years and the average figure published by the IRS works in my favour every time.  So I think I will switch to that method in future.  Thanks again for the tip. 

I use:

http://www.oanda.com/currency/historical-rates/

You can set the date range from 1/1/12 - 12/31/12 to give the average rate. You can back work from USD/GBP and GPB/USD also.  For any form that requires the 12/31/12 rate, I use:

http://www.fms.treas.gov/intn.html

Some forms specifically ask that you use this site for December 31st rate.