Form 8938

Please don't judge me, this one is pretty stupid. 

When completing my US taxes, I used the yearly average exchange rate to convert U.K. rental income and interest into US dollars, as per the instructions. However, I also used the same yearly average exchange rate to convert data for form 8938 as I wanted to keep it consistent. Now looks like I should have used the exchange rate from 31st December for that year for form 8938. 

Here is the dilemma; I am submitting my FBAR late for the same year and I think I have three options; 

1. Complete FBAR with same yearly average exchange rates in order to keep everything consistent. This will mean going against the instructions on the FBAR to use the 31st December exchange rate.

2. Submit a 1040X with an adjusted form 8938 using the correct 31st December exchange rate and then use the same exchange rate for the FBAR.

3. Leave form 8938 as is and use the correct 31st December exchange rate for the FBAR. This will mean that the dollar amounts will be different on the FBAR and form 8938. 

Any advise would be gratefully received. 

Thanks

Complete the FBAR per instructions, with the Fx rate specified. Remember, this is a informational report of your bank accounts filed with the Treasury Department, and based on the highest balance at any point during the reporting year.

Are you sure you needed to file the 8938? Most of us don't come anywhere near the filing threshold. If you do, well done!

There are more answers here: http://britishexpats.com/forum/usa-57/form-8938-a-887714/

Thanks Guru.

I'm fortunate enough to hit the threshold because my entire life is in the U.K. I am only here on a temporary L1 visa.

Appreciate the feedback. That's where my head is at in terms of not complicating things. I also think that I have to get the FBAR right as the instructions are very clear.

I did the work to create the updated 1040X and the corrected form 8938 but didn't post it as I just didn't want to make things any worse.

I would definitely simply file the FBAR with the rate specified as of December 31st.

Even if you used the wrong rate to determine if you should file form 8938 with your tax return, all form 8938 wants to know are the details of where any foreign income from the named foreign institutions is reported on your tax return.  It is more important to have the correct exchange rate when declaring the income to the IRS. Having said that, for many years I used the spot rate on XE.com to calculate my monthly UK pension and UK bank interest before I discovered the IRS official average rate for periodic payments, but I never went back and amended any returns.