The IRS permits taxpayers to claim tax credits for certain nontaxable uses (and sales) of fuel1. To claim such credits, taxpayers are required to complete Form 4136. Form 4136 permits special deductions for many types of uses of gasoline, aviation gasoline, diesel fuel, aviation kerosene, alternative fuel, and more. Additionally, the Form can be used to claim tax credits for certain vendor sales of fuel.
In completing Form 4136, taxpayers will notice most line items require a stipulation of each fuel’s “Type of Use.” The following list outlines the many options for which a taxpayer may use fuel:
#1 – On a farm for farming purposes
#2 – Off-highway business use (for business use other than in a highway vehicle registered or required to be registered for highway use)
#3 – Export
#4 – In a boat engaged in commercial fishing
#5 – In certain intercity and local buses
#6 – In a qualified local bus
#7 – In a bus transporting students and employees of schools (school buses)
#8 – For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use)
#9 – In foreign trade
#10 – Certain helicopter and fixed-wing aircraft uses
#11 – Exclusive use by a qualified blood collector organization
#12 – In a highway vehicle owned by the United States that is not used on a highway
#13 – Exclusive use by a nonprofit educational organization
#14 – Exclusive use by a state, political subdivision of a state, or the District of Columbia
#15 – In an aircraft or vehicle owned by an aircraft museum
#16 – In military aircraft
For more guidance in completing Form 4136, please consult the Form 4136 Instructions.
1The most common nontaxable uses of fuel by individual taxpayers include farm use and business use (see #1 and #2 above)
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