Just a quick PSA, for those of us who were “eagerly” awaiting them so we can wrap up that particular bit of annual US silliness. First time I’ll have to do FBARs for the kids, will write something up if that turns out to be any more challenging than mine (hoping not, it’s only one account each).
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FIRE Across the Pond 
And in case you can’t be bothered to dig through the terrible interface, the value for GBP to the USD for 31st December 2022 is… 0.83
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This is probably a rookie question—any idea what this exchange rate actually reflects? Is it the rate on that date (31/12) or the average rate for the calendar year? It looks like they release the exchange rate quarterly—are those cumulative averages for the year?…or that quarter?…or the rate on whatever given date?
My spending tracker has a monthly exchange rate and the average for the year is different from this published rate, so I’m curious where they actually make this number from—my number is more advantageous haha!
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It’s a good question that I never bothered to look into – all I knew is “this is the exchange rate you MUST use for FBAR”, so I do. Looking a bit more on the linked page, these are the exchange rates that the US government uses for its own reporting – any US government assets and liabilities in foreign currencies are converted to USD. How they calculate it, I don’t know, couldn’t find that but maybe somebody else knows?
For almost all other purposes, I use HMRC’s monthly exchange rates (for my personal tracking and for my US and UK taxes): https://www.gov.uk/government/publications/hmrc-exchange-rates-for-2023-monthly Feels like monthly rates are a reasonable compromise – annual covers over lots of variation, daily spot rates is a lot of effort. I do use daily rates for UK reporting of business transactions, because that’s what they expect, but that’s very few these days.
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I use the exchange rates here for converting GBP income and transactions throughout the year: https://www.federalreserve.gov/releases/h10/hist/dat00_uk.htm
However, my understanding is that for FinCen 114 (FBAR) and form 8938 you should be using the maximum amount each account reached, (presumably in USD although I just find the maximum GBP amount in the year), then use the official rate when converting/reporting that max value. It’s not the average yearly rate, but rather the official rate for the end of the year (31 Dec), even though the account may have reached it’s maximum earlier in the year (when the rate was different).
In the past I’ve submitted my FBAR too early and used a rate published elsewhere but didn’t have any problems. I do however try to make sure my values in my FBAR match my form 8938 (assuming you also need to file that).
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Thanks both for the insight & links
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