You’ve seen the sticker on gas pumps when you were filling your tank. It tells you how much of the price each gallon goes for taxes. Those taxes go to pay for new road construction and other transportation-related projects. The idea is that those who drive more buy more gas and pay a greater share of the costs for the roads. But a lot of the gasoline you buy is not used driving down the road but instead powers your carpet cleaning equipment.
If you can show how many gallons of gas (or diesel fuel or kerosene) were used for purposes other than transportation, you are entitled to a fuel tax credit. This is not simply a deduction from your business income, it is actual cash. This can be sent to you as a check or subtracted from other taxes you owe.
To claim this refund of fuel taxes paid, you must first calculate how many gallons of fuel were used for something other than transportation. If your setup includes a separate fuel tank for your truckmount, this can be as easy as recording the gallons dispensed into that tank. If you use a fuel tap too, and your truckmount draws fuel from the same tank as your van, you need to find out how many gallons per hour are burned when your van is sitting still and cleaning. This may range from slightly over 1 gallon per hour for smaller engines (16 to 18 HP range) to approximately 1.5 gallons per hour for 25 to 30 HP engines and as much as 2.5 gallons per hour for equipment that takes its power from the van engine. For more exact numbers, contact the manufacturer of your equipment.
The next step is to calculate the number of hours the engine was running for the year. This is easily obtained by recording the number on your hour meter at the beginning and end of each year.
Multiply hours of each by usage rate to learn how many gallons of fuel you burned for non-highway driving during the year.
Let’s do an example. Say your engine uses 1.5 gallons per hour while cleaning. You operated your van for 800 hours over the course of a year. 800 x 1.5 = 1200 gallons burned.
The credit for gasoline is 18.3 cents per gallon. Multiplied by the 1200 gallons you used, nets you a tax credit of $219.60! Feel free to come by and spend that cash at Interlink Supply when the check comes in.
If you happen to burn kerosene or diesel fuel, the credit is even higher, 24.3 cents per gallon.
Request the credit on form 4136. This is filed along with your annual federal income tax return. The amount of credit will be added to any refund due to you or can be subtracted from any amount you owe.