How to calculate your quarterly IFTA report – An easy and flexible way with OTS

One of the most onerous obligations for commercial fleets using paper logs is the calculation, preparation, and reporting of IFTA reports. Determine how far vehicles went in each jurisdiction. It is difficult and involves carefully reading trip papers from the previous quarter.

 IFTA: What is it?

 The cooperative agreement known as IFTA was reached by 10 Canadian provinces and 48 U.S. states. The fuel that inter-jurisdictional carriers’ cars use when traveling between states can be reported and taxed—utilizing just one fuel tax license.

It’s critical to grasp the rationale for the creation of IFTA to comprehend it completely.

Before the IFTA, truckers had to get gasoline licenses from each state they crossed into.

The procedure was inefficient and resulted in extra expenses such as lost time, fuel used to travel to permit purchasing locations, and related fees.

Inconsistent filing deadlines, guidelines, definitions, and reporting requirements that necessitated numerous hours of administrative effort were also imposed on fleets.

 What is IFTA, and who needs to file the IFTA returns?

 The lower 48 states and 10 Canadian provinces have signed the International Fuel Tax Agreement (IFTA), which divides taxes on fuel sales. The agreement aims to match taxes incurred on fuel purchases made in one state to taxes incurred in other states where the vehicle uses the same fuel tank.

If a driver uses a qualifying motor vehicle in more than one jurisdiction, they must obtain an IFTA license and file an IFTA return. A car that weighs more than 26,000 pounds or has three or more axles qualifies as a motor vehicle (regardless of weight).

It should be noted that IFTA regulations do not apply to drivers who only operate in the Canadian territory of Yukon, Nunavut, Northwest Territories, or in Alaska or Hawaii.

 When are IFTA reports due?

 Due to the quarterly nature of IFTA reporting, fleets must file four times a year. Each reporting quarter’s deadline date for submitting IFTA reports is listed in the following table:

You must submit quarterly IFTA reports even if your fleet does not operate for a quarter (seasonal drivers, for example). Even when no taxable fuel was consumed during the quarter, fleets must still submit a “zero” report in this situation.

 How to prepare your quarterly IFTA reports with Motive

 You can fully automate state-by-state mileage collection from trip reports with the aid of Motive. The Motive ELD scans the engine odometer and recognizes when a vehicle crosses a jurisdictional line. Each vehicle’s distance is then neatly grouped in the Motive dashboard for fleets utilizing the odometer readings obtained from each border.

Tips And Best Practices When Calculating Your IFTA Taxes

One of the most important tax bills fleet managers today must remember is the International Fuel Tax Agreement (the IFTA), a tax aimed at trucks requiring managers to pay fuel taxes through quarterly IFTA tax forms.

Falling behind with your Ifta Reporting is, well, not an option, and that’s why below, we’re going to be taking a deeper look at how you can better understand filing your IFTA quarterly forms.

Who Does the IFTA Fuel Tax Apply To?

The taxes imposed by the International Fuel Tax Agreement apply to trucking companies operating mainly in Canada and the United States. That means if you operate inside the 48 US states or the 10 Canadian provinces, you have to pay these fuel consumption taxes. You can calculate your taxes yourself or use an Ifta Calculator to do the same thing much easier.

Why Was the IFTA Instituted?

While it may not look like it at first glance, the International Fuel Tax Agreement is actually meant to make the lives of fleet managers and truck drivers easier. If you’re carrying an IFTA license (and your truck has the set of decals provided by the IFTA on each side), you aren’t required to stop for a fuel tax permit when entering a new state or when entering a Canadian province.

How To Calculate Your IFTA Taxes

To remain fully compliant, companies must create a process for recording the fuel consumed in different jurisdictions traveled through along their trucking routes. These trucking companies also have to educate their drivers on recording their odometer readings when crossing US state or Canadian province lines. Information like:

•       the date of fuel purchases,
•       the price of fuel per gallon,
•       the driver’s name who bought the fuel,
•       and the vehicle license plate,

Have to be recorded and stated on your IFTA tax forms. But, well, that sounds complicated, right? Here’s a breakdown of a simpler, step-by-step method to calculate your IFTA taxes:

1.    Calculating IFTA-Taxable Miles By State

To start calculating your IFTA taxes, you first have to record two essential things:

•       The total amount of miles driven,
•       And the fuel amounts purchased in every state or province.

After that, it gets very easy. To get your final fuel mileage, divide the total miles driven by the total gallons of fuel purchased. You should note that you can round the fuel mileage (also called miles per gallon) to two decimal points.

2.    IFTA Taxes By State Or Province

For the next step, you have to find the IFTA tax amount owed by your fleet for each quarter by the state or province. To calculate this, you’ll need the applicable rates that have been pre-determined by the IFTA.

Note that the IFTA tax rates are updated quarterly for each province and state, so make sure you run a quick Google run, so you’re up-to-date on the correct tax rates!

3.    Doing Your IFTA Taxes

Finally, to finish calculating your IFTA taxes, simply use this formula:

Fuel Tax Required In Each State/Province – Fuel Tax Paid In Each State/ Province X = Fuel Tax Still Owed To Each State/Province

You can know how much you’ve already paid in fuel taxes by looking at the fuel receipts from each fuel purchase.

Filing Your IFTA Taxes

Submitting your IFTA taxes is actually really easy. Just head to your home state’s or province’s online portal, and make the payments from there.

Tips For Filing IFTA Tax Reporting

•       You can get certain mileage exceptions in a number of jurisdictions. To find out more, run a quick Google search.
•       Remind your drivers to only purchase as much fuel as is actually needed, as states and provinces will add surcharges regardless of whether the fuel was used in their jurisdiction or not.
•       Remember to deduct the tax already paid per gallon when purchasing so you don’t overpay your taxes.

The Takeaway: Using IFTA Calculators

Now you know how to calculate your IFTA taxes yourself, but there’s still a big problem: human error. You could be the best manager on the planet, but everybody makes mistakes, and that’s why it’s important not to take chances. Rather than calculating it yourself, it’s a better idea to use Ifta Mileage Calculator software that can do the job for you.

Conclusion

 More than just ELD requirement compliance is available with the Motive ELD system. Fleets can easily create quarterly IFTA reports using the Motive ELD solution to automatically determine the distances their vehicles travel in each jurisdiction.

 Choose the appropriate quarter, export the summary, and submit your IFTA returns. There is no more manageable situation than this one!

I hope this article has helped you.