Income uses a yearly average, sales use the rate on each date, and FBAR and Form 8938 account values use the Treasury rate for December 31. Divide the Canadian amount by the rate.
Lou is a tax-preparation tool, not a tax advisor. This article explains general rules for US citizens and green card holders who live in Canada. For advice on your situation, work with a qualified tax professional.
Every Canadian number on your US return has to be in US dollars. The IRS does not publish one official rate. It generally accepts any posted exchange rate that you use consistently. That freedom is useful, but only if you pick the right type of rate for each item.
The rate is CAD per USD#
Rates are quoted as Canadian dollars for one US dollar. To convert, divide the Canadian amount by the rate. At a rate of 1.4000, a salary of $84,500.00 CAD is $60,357.14 USD.
Income: the yearly average#
For wages, interest, dividends and pensions received through the year, the IRS yearly average is the usual choice:
| Year | CAD per USD |
|---|---|
| 2025 | 1.398 |
| 2024 | 1.37 |
| 2023 | 1.35 |
Sales: the rate on each date#
When you sell shares or other investments, the gain is figured in US dollars. That means converting what you paid at the rate on the day you bought, and the proceeds at the rate on the day you sold. A yearly average does not work for this, because currency movement between the two dates becomes part of your gain or loss.
Account values: the Treasury rate for December 31#
The FBAR and Form 8938 use the US Treasury rate for December 31 of the year. It is not the same as the yearly average.
| Year | Treasury rate, December 31 |
|---|---|
| 2020 | 1.275 |
| 2021 | 1.277 |
| 2022 | 1.354 |
| 2023 | 1.326 |
| 2024 | 1.438 |
| 2025 | 1.369 |
FBAR values are rounded up to the next whole dollar.
Common mistakes#
- Multiplying instead of dividing.
- Using the year-end rate for wages, or the yearly average for an FBAR.
- Switching rates between items without a reason. The IRS wants consistent use.
Where Lou fits#
Lou uses the right rate for each item, divides for you, and shows the rate under every number so you can check it. Sales use Bank of Canada daily rates for the date of each trade. The full list is in the exchange rate guide. Account reporting rules are in the FBAR guide and the Form 8938 guide.
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