Form 4136 - Federal Tax Credit for Fuels

Discussion in 'Business Operations' started by mountain man, Jan 9, 2003.

  1. mountain man

    mountain man LawnSite Member
    Messages: 141

    Currently, going over the budget for 2003 and studying last years income statement. I was wondering if anyone has ideas for tracking the tax credit for fuels. Form 4136 allows you to get a tax credit for all the gas you use for mix and mowers (basically anything that burns gas not on roads). In a perfect world, you would keep a set of receipts for vehicles and another for mowers and mix. However, I think the KISS system is better for the crews and will probably just take the total fuel expense and take a percentage for Form 4136. Anybody else have ideas for keeping it simple, keeping it legal, but also maximizing the credit?
  2. PaulJ

    PaulJ LawnSite Bronze Member
    Messages: 1,774

    When I fill up I use one pump for the truck and the one behind it for the mowers etc.. Have the station seperate them on the reciept/ticket--they can still do just one ticket. Teh station I go to knows that I need both pumps amount listed seperat-then keep the reciepts and total the amounts for each.

    This is what I was planning BUT I found out reacently that we have to purchaxe fuel 40 gallons at a time to be able to get the fuel tax credit. I usually use less thatn 10gal at a time. (the WB and a couple of little cans). I am thinking about getting a storage tank for fuel to keep at my shop. probably just a 50gal barrel with a hand pump. I realy don't want to tie up truck bed space with an extra fuel tank.

    Good luck
  3. bruces

    bruces LawnSite Senior Member
    Messages: 648

    Where did you get the 40 gal at a time info?

    Is that a federal or state rule?

    New to me if that is a federal rule.

    More info please.
  4. I've looked at the form for this deduction. Since I already deduct the full price (tax included) of the gas as a business expense would this deduction still be allowable? It would seem to make sense that you don't deduct the same expense twice. Has anybody asked their tax person this?

    Truck and machine fuel are separate entries for me. If I buy both at the same time I note it on the receipt.
  5. bruces

    bruces LawnSite Senior Member
    Messages: 648


    The form 4136 generates a credit for the fuel taxes paid, not a deduction. The credit comes directly off of your tax bill.

    However, the credit is income in the current year.

    Example, credit of $150 against 2002 taxes taken on the return filed 4/15/03.

    That credit becomes income on your 2003 return.

    You are still ahead, you get a credit of $150, pick up the income next year, which will cost you the credit amount X your tax bracket.
  6. GroundKprs

    GroundKprs LawnSite Bronze Member
    Messages: 1,969

    Just keep separate receipts, and note them when you purchase. You can also get credit for state fuel taxes, but rules vary by state.

    And look again at what bruce says. I get a cash refund or credit of 36ยข/gallon in Indiana, including both state and federal taxes. I'd rather have the money back, than just use that to reduce my taxes. Easy choice: $500 cash back, or $500 deduction?
  7. Think I got it. Must have forgotten it was a credit. So deduct gas less tax as expense on schedule c, then use 4136 to take credit for tax portion of fuel.
    Or do you take the credit (4136) on the tax portion along with deducting full price of fuel on C?
  8. mountain man

    mountain man LawnSite Member
    Messages: 141

    Can you take the total miles for the year driven for each vehicle, divide that number by the average mpg for each vehicle and then deduct it from the total fuel expense to figure off road fuel use?

    The reason I ask this is often the crew leaders have a good idea how much total fuel they will need for the week. They will come in early on Monday and fill up their truck and equipment at the store as well as 4 or 5 extra 6 gallon gas jugs. Then later in the week they will use that gas to top off their truck and mowers so they don't loose production time for a second visit to the gas station during the week.

    If I start making them go to the store twice during the week so I can get 2 receipts each time, I will probably loose the benefit of the credit by having to pay the labor for the second visit.
  9. bruces

    bruces LawnSite Senior Member
    Messages: 648

    First, deduct the full price of the fuel.

    Second, the form 4136 computes the credit based on the off road gallons used times the tax rate. You don't need to know the tax portion, you just need to know the gallons for off road use.

    The credit then shows up on your return just like withhholding or an estimate payment on your return.

    Because you get the benefit of the credit just like it was cash, the credit amount is taxable as income on the following year's return.

    Mountain Man wrote
    You can do whatever you want. You don't submit any proof of off road use with the 4136, you just say how many gallons you used.

    That is probably a reasonable way to compute, but would be better if you had actual

    Most IRS agents would probably not give you too much grief if you were audited, some real sticklers might.
  10. CincyLawnCare

    CincyLawnCare LawnSite Member
    Messages: 26

    If you have a problem keeping track of 2 sets of receipts.. You could always get 2 Gas station credit cards. 1 for vehicles and 1 for equipment. You would just always have to go to a BP, Shell, Excon, ect.... for that idea, if it really matters where u get ur gas.

    Mountain Man: Don't they pass a gas station to or from one of their jobs throught the day?

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