AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Report naira income on Schedule C in US dollars at the exchange rate prevailing when you received it; the IRS says it has no official rate and accepts posted rates, such as bank or Federal Reserve rates, used consistently. Its yearly average table has no naira row, so most freelancers paid in naira record a rate for each receipt from one named source. Keep the invoice, the bank credit and the rate used.
What the IRS actually requires
Amounts on a US return must be in US dollars. The IRS page on foreign currency (reviewed May 2026) says to use the exchange rate prevailing, the spot rate, when you receive, pay or accrue the item. It also says the IRS has no official exchange rate and generally accepts any posted rate that is used consistently, listing sources such as banks, US embassies, the Treasury, the Federal Reserve and commercial sites. To convert, you divide the naira amount by the rate in naira per dollar.
The IRS also publishes yearly average rates that some taxpayers use for income received evenly through the year. As at its September 2026 review, that table has no row for the Nigerian naira, so the shortcut is not there for naira earners.
Invoice date or payment date
Most self-employed people on Schedule C use the cash method: income counts when it is received. On that basis the rate that matters is the one on the day the naira reached you, not the day you sent the invoice. If an invoice for ₦3,000,000 is issued in March and paid in June, the June rate applies. If you use the accrual method, the income is recognised when earned and later rate movements before payment are a separate matter; ask your preparer how to treat them.
Choosing a source and sticking to it
The point the IRS stresses is consistency. Pick one source at the start of the year and use it for every receipt. Reasonable choices for naira:
- The rate your bank or provider actually applied, where you converted on the day of receipt. It matches the dollars you really got.
- A published reference rate. The Central Bank of Nigeria publishes official and monthly average naira rates against the dollar on its exchange rates page.
- A recognised commercial rate service, used the same way each time.
Do not switch between sources depending on which gives a lower dollar figure. That is the kind of selection a reviewer notices. Write the source in your records so the method can be explained later.
Worked example (illustrative rates)
Ada, a copywriter in Dallas, is paid in naira by two Lagos agencies. She uses one reference source for every receipt. The rates below are examples only.
| Date received | Naira received | Example rate (₦ per $) | USD for Schedule C |
|---|---|---|---|
| 14 Feb 2026 | ₦1,500,000 | 1,500 | $1,000.00 |
| 3 Jun 2026 | ₦2,400,000 | 1,600 | $1,500.00 |
| 21 Oct 2026 | ₦900,000 | 1,500 | $600.00 |
| Total | ₦4,800,000 | $3,100.00 |
Each line is the naira amount divided by the rate. If Ada later converts the naira to dollars at a different rate, any difference is a currency gain or loss on holding naira, which is separate from her business income; how it is treated depends on the facts, so ask a preparer.
Expenses paid in naira
The same IRS rule covers money going out: an item is converted at the rate prevailing when it is paid. If you pay a Lagos-based assistant ₦200,000 for research, buy data bundles for a working trip, or pay a Nigerian co-working space, convert each payment on its own date using the same source you use for income. Keep the receipt or bank debit, and note the business purpose. Mixing business and family spending in one naira account makes this much harder; a separate account, or at least a separate tag for business items, keeps the Schedule C figures clean and easy to defend if the IRS asks questions later.
Records to keep for each receipt
- The invoice: client name, date, service, naira amount.
- The bank or account credit showing the date and amount received.
- Any Nigerian withholding tax receipt, if the client deducted tax.
- The rate used, its source and the date, saved as a screenshot or download.
- A running spreadsheet with naira, rate and dollar columns that ties to your Schedule C total.
If withholding tax was deducted, report the gross fee as income and treat the tax separately; see claiming Nigerian WHT as a foreign tax credit.
Common mistakes
- Converting the whole year's naira at the 31 December rate. That is not the rate prevailing when each payment arrived.
- Reporting only what reached a US account. Naira left in a Nigerian account is still income when received.
- Ignoring Nigerian accounts on FBAR. If your foreign account balances together top $10,000 at any time in the year, an FBAR is due; see FBAR for Nigerian accounts.
Where Pryme fits
Clients in Nigeria can pay you in naira into a Pryme account opened from the US. Each credit carries a date and amount, and you can generate a statement or a verifiable receipt through VerifyDoc.ai for your records. When you convert with Swap, the rate and fee are shown before you approve.
Questions people ask
What exchange rate should I use for naira income on my US tax return?
The rate prevailing on the day you received the income, from one posted source used consistently. The IRS has no official rate.
Does the IRS publish a yearly average rate for the naira?
No. The IRS yearly average table reviewed in September 2026 has no naira row.
Can I use the CBN rate for my Schedule C?
The IRS accepts posted rates used consistently. The CBN publishes naira rates, so it can serve as your source if you use it for every receipt.
Do I convert on the invoice date or the payment date?
On the cash method, which most freelancers use, the payment date.
Sources
- IRS: Foreign currency and currency exchange rates (reviewed 22 May 2026) · accessed Oct 2026
- IRS: Yearly average currency exchange rates (reviewed 17 Sep 2026) · accessed Oct 2026
- Central Bank of Nigeria: Monthly average exchange rates · accessed Oct 2026
- IRS: Comparison of Form 8938 and FBAR requirements (reviewed 19 Sep 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.