Before we get into ‘How to Calculate your Fuel Tax?’ using an IFTA Fuel Tax calculator software, let’s look at an overview of the process and the things needed before starting
IFTA fuel tax is determined based on the gallon amount of fuel you burn in each member state/jurisdiction.
In order to do this:
- You will need to know the number of miles you traveled in each state.
- You will need to document fuel you purchased in gallons for every state.
- You will have to estimate your fleet’s mileage during the reporting term.
- You will have to estimate the total number of gallons you’ve used in each state.
- You will need to compute the fuel tax you owe in every state/jurisdiction.
- At last, you will need to calculate the final amount owed on your IFTA returns.
What Will You Need
- Fuel bills/receipts
- Miles travelled in each IFTA State
- IFTA tax rate
Calculating Fuel Tax Reports
Total Miles Travelled
Input the total miles traveled in each specific state/jurisdiction for the particular fuel type.
Total Miles Taxable per State
Input the total miles taxable in each state and deduct the fuel trip permit miles. Note that ‘Fuel trip permit miles’ is not taxable in any jurisdiction. Other examples of non-taxable taxable miles in certain IFTA states are ‘Toll miles’ and ‘off-highway miles’. You can reach out to each jurisdiction for more information on this.
In those cases where you forgot to input your taxable miles in the report, the total number of miles will be used as taxable miles. Another thing to note is that your total taxable miles cannot exceed your total miles
Taxable Gallons on CONSUMED Fuel
Divide your total taxable miles by the miles-per-gallon factor and round up that figure to the closest whole gallon.
Tax Paid on Fuel Purchases
Input the total gallons bought for all fleet vehicles. These figures are to be taken from your fuel receipts.
For Example: You should total the amounts from all fuel receipts purchased in Missouri. Let’s say your receipts total up to a 1,000 gallons, then your gallon input on fuel purchases in Missouri should be 1,000.
For those utilizing bulk storage, you should report just the tax paid gallons that are used in your fleet vehicles. The remaining or unused fuel cannot be filed into your IFTA reports until it is used.
Net Gallons Taxable
The difference between the taxable gallons used and tax-paid gallons bought if taxable gallons used is more than tax paid gallons, then subtract tax paid gallons from taxable gallons used and enter that figure under net taxable gallons. This is the tax due.
If tax paid gallons is more than taxable gallons used, then subtract the taxable gallons used from tax paid gallons and then enter the taxable gallons under net taxable gallons. This represents credit earned.
Input the tax rate applicable for each state, and the type of fuel in the returns report. The rate for every state or jurisdiction should be inserted into the IFTA quarterly tax report. Another thing to know is that these rates subject to change every quarter.
Calculate Tax Due or Credit Earned
You can calculate tax due or your credit earned for each IFTA member state by multiplying the net taxable gallons by the above mentioned tax rate. This is your tax due or credit earned for each IFTA jurisdiction.
For late or revised returns reports, the interest is calculated on tax due from the due date of the return till the payment is received. This interest is calculated at 1% per month.
Add both ‘tax due/credit earned‘ and ‘interest due’ amounts if applicable. This is the tax due or credit earned for each IFTA jurisdiction. You can compute this by adding the positive numbers in the ‘Total tax due’ column and subtracting the negative numbers in the ‘Total credit earned’ column. Your net result will either be positive, which is your ‘tax due’, or negative, which is your ‘credit earned’.
Input the Net Result
Finally you will have to input the net result ‘tax due’ or ‘credit earned’. Returns that have not been filed within the due date are deemed late or delinquent. A penalty of 50 dollars or 10% of net your tax liability, whichever is higher, is weighed on returns filed after the due date, failing to file reports, and for underpaying on your fuel tax. If your net tax liability is zero or bears credit, then the penalty is also $50.
Total remittance is the total of all taxes, interest, and penalties.
Now since you’ve been educated on how to calculate your fuel tax. You should know about Fleet tracking and equipment tracking systems and how this can help automate the data-collection aspect of filing your IFTA Tax as well as offer increased fleet security, insurance benefits, and many more.
What is Fleet Tracking?
Fleet tracking is a tracking and management system that utilizes GPS tracking to monitor the activity of fleet vehicles. This is also referred to as ‘vehicle tracking’ or ‘automatic vehicle location’.
Fleet tracking is done through the use of telematics technology to gather data from fleet vehicles. This GPS tracking device is mounted onto a vehicle’s On-Board Diagnostics port, which allows for data to be gathered in real time. This is even more useful for business owners, as they can use the information collected to make business decisions and come up with strategies.
Benefits of a Fleet Tracking System
An efficient fleet tracking system can help improve:
- Bad driving habits
- Fuel consumption and cost
- Dispatching processes
- Comply with FMCSA regulations such as ‘Hours of Service’ and ‘ELD mandate’
- Fleet maintenance cost
- Data-gathering for IFTA Reports (miles travelled per state, fuel usage, fuel purchases, etc.)
- Preventive Maintenance
Importance of Fleet Tracking in Fleet Management
For proper fleet management, you will need a fleet tracking software that can process and store huge amounts of data, as well as provide user-friendly reporting dashboards with features for alerts and notifications.
Imagine how much time your team can save by eliminating the manual process of gathering the necessary data from the drivers and logging it into the office. Your drivers can focus on their job in the field because they will not have to use paper-based logs, and the office will not have to sort through mounds of paperwork and manually compute the amount to be taxed, leaving room for human error throughout the whole process.
Ultimately, you can prepare IFTA reports quickly and correctly with a Fleet tracking software and have the peace of mind in knowing that your books are in order.