Iowa Form 4136 Motor Fuel Tax Credit

Iowa Form 4136 Motor Fuel Tax Credit

The Iowa Form 4136, also known as the Iowa Fuel Tax Credit, allows eligible taxpayers to claim a credit for motor fuel taxes paid on fuel used for non-highway purposes. This credit is available for various types of fuel, including gasoline, ethanol-blended gasoline, undyed diesel, biodiesel, and liquefied petroleum gas (LPG).

Eligible Fuel Types and Tax Rates

• Gasoline: Tax rate of $0.255 per gallon (for fuel used in unlicensed vehicles for non-highway purposes).
• Ethanol Blended Gasoline — E-10 to E-14: Tax rate of $0.300 per gallon.
• Ethanol Blended Gasoline — E-15 or Higher (including E-85): Tax rate of $0.265 per gallon.
• Undyed Diesel or Undyed Biodiesel Fuel — B-0 to B-19: Tax rate of $0.325 per gallon.
• Undyed Biodiesel Fuel — Blends B-20 or Higher: Tax rate of $0.295 per gallon.
• Liquefied Petroleum Gas (LPG): Tax rate of $0.300 per gallon.

How to Claim the Credit

To claim the Iowa Fuel Tax Credit, taxpayers must complete Form IA 4136. The form requires the following information:

• Federal Employer Identification Number (FEIN) or Social Security Number (SSN).
• Legal name and doing business as (DBA) name, if applicable.
• Pass-through entity information, if applicable.
• Tax period ending date.
• Indication of how the fuel was used (e.g., farming, commercial, commercial fishing, other).

On the form, taxpayers must enter details for each type of fuel purchased, including:

• Invoice date and total gallons purchased (Invoice Gallons).
• Gallons used on highways (Highway Gallons).
• Claimed gallons (Invoice Gallons minus Highway Gallons).
• Fuel tax paid (Claimed Gallons × Applicable Tax Rate).

Pass-Through Entities

If a taxpayer receives a pass-through Fuel Tax Credit from a partnership, LLC, S corporation, estate, or trust, they must enter that amount on Line 8 of Form IA 4136. The pass-through entity must file a separate IA 4136 for each credit received and allocate the credit to members based on their share of the entity’s earnings. Special allocations are not permitted.

Reporting Requirements

The total fuel tax credit (lines 7 and 8) must be reported on the appropriate Iowa return:

• Individuals: Report on IA 1040 (Main return, Step 6, line 23).
• C Corporations: Report on IA 1120 (Main return Schedule C1, line 1).
• Trusts and Estates: Report on IA 1041 (Main return, line 42 for entity-level claims; Schedule K-1 for allocated amounts).
• Partnerships: Report on IA 1065 (Main return Schedule B and Schedule K-1).
• S Corporations: Report on IA 1120S (Main return Schedule B and Schedule K-1).

Taxpayers must include Form IA 4136 with their Iowa return and retain all supporting invoices for three years after filing.

Software Assistance

OLT (Online Taxes) software can guide users through adding Form IA 4136 while filing their Iowa state tax return. Users can access this feature by navigating to the State section in the software and selecting "IA 4136 - Motor Fuel Tax Credit."

Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions before filing.

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