Calculating IFTA is among the most time consuming and tedious tasks that you will do as a fleet manager or individual truck driver – especially if you are still using paper logs. Whether it’s your first time filing an IFTA report or your 50th, we’re here to show you the easiest way to file your fuel tax return – with or without an automated IFTA mileage calculator.
Pretty straightforward right? Let’s get started.
Step 1 - Adding Up Taxable Mileages
This is the most tedious step in the entire process – that’s why we’re going to take you through 3 different methods of calculating your mileages. Manually tracking your odometer readings (~2 hours/truck), using a trip mileage calculator (~1.5 hours/truck), and leverage a fully automated IFTA mileage reporting solution (2 minutes)
Mileage Calculation Method 1: Manual Mileage Tracking
Let’s start with the traditional and most time consuming method. Get out your pen, paper, and calculator – we’re going to be adding up a lot of numbers.
For documentation, you will need an accurate record of your state-by-state (or province) miles for this quarter’s report, your fuel receipts for each individual state/province, and the most recent IFTA tax rates for this quarter (or an automated tool)
Manually calculate IFTA mileage per state, per trip
You will need to keep track of how many miles were traveled in each state or province.
Make sure to record your odometer reading when:
- You cross a state/province border
- You refuel
Now, for each corresponding entry and exit for a particular state or province, make sure you subtract the ending odometer reading from the entry reading. This will give you the miles traveled for that state, for that instance.
Miles in [State/Prov] = Exit Reading in [State/Prov] — Entry Reading in [State/Prov]
As a result, you will have a mileage number for each time your truck entered a new state.
Manually tally up your total mileage per state/province
Group and add together all your mileages for each state/province your truck has traveled in. For example, say your truck has entered Washington 3 times in the last quarter:
You would add up the mileage for each entrance, resulting in a total of 3654 miles in Washington for this reporting quarter. Repeat this step for each state.
Manually add up total mileage for entire quarter
The last step in terms of mileage calculations is recording the total mileage for the entire quarter. To do this, add up all the miles traveled from every state for the quarter – this number will be used in the next step of the process.
Before we jump to Method #2, let’s quickly review the benefits and downsides of manually tracking your IFTA mileages.
Quick Mileage Calculation Recap - Method 1: Manual Mileage Tracking
Benefits of Manual IFTA Calculation:
- Accurate odometer readings
- “Free” – Doesn’t account for hours spent on calculations
Cons of Manual IFTA Calculation:
- Human error – easy to forget to record odometer reading or make mistakes when adding up mileages
- Most time consuming method – may take days to complete for each truck
- Doesn’t scale – the more trips/trucks, the longer it takes
Mileage Calculation Method 2: Using an IFTA Mileage Calculator
Instead of keeping track of your odometer readings every time your truck enters and leaves a province, you can use a trip mileage calculator tool to help estimate the miles traveled for every trip. You can use a tool such as Switchboard's Mileage Calculator if you choose to go with this method of performing IFTA mileage calculations.
Collect all your trips
The first thing you’ll want to do is keep track of every individual trip your truck went on. For audit purposes, you would want to also keep track of your starting and ending odometer reading for each trip.
Once you have organized the information from all your trips in the 3 month reporting quarter, we’re ready for the next step.
Enter start and end point
For each trip, using the trip calculator of your choosing, input the starting location and the destination. Certain calculators will ask you for routing preferences as well, which may help improve the accuracy of the estimated mileage.
Record trip mileage per state/province
The mileage calculator you use should then present you with a route, as well as the miles traveled in each state/province.
Record the mileage for each state/province individually on a spreadsheet, as you’ll need to add all miles traveled for a particular state across all your trips.
Repeat until you've done this for all trips
Quick Mileage Calculation Recap - Method 2: Trip Mileage Calculator
- You don’t need to keep track of odometer readings at each entry and exit of state borders
- Free mileage calculators online
- Lack of accuracy – uses estimates for miles per state
- Human error – mistakes can easily be made when adding up mileages from each trip report
- Time required – anywhere from a couple hours to a day per truck
- Doesn’t scale – the more trucks, the more days it may take
Mileage Calculation Method 3: Automated IFTA Calculation
As we’ve showed you above, it can take days or even weeks (for larger fleets) to calculate your mileages for a single reporting quarter. Whether you go with the completely manual method of recording odometer readings, or trip mileage calculators, there are drawbacks to each solution.
That brings us to the third and final option. With Switchboard, we automatically add the mileages per state/province for every truck. This allows for scalability and efficiency as teams grow.
You can also see a breakdown for each individual truck’s mileage report, which is extremely important for transparency, as well as in the event you get audited. Switchboard also makes it easy for you to export or print the reports you want.
Quick Mileage Calculation Recap - Method 3: Automated IFTA Calculation
- No manual odometer tracking
- No mileage calculations
- No human input/calculation error
- Pinpoint accuracy - automatically tracks your odometer reading and location
- Scales with you - generates report within a minute for any sized fleet
As with all our trucking and fleet management solutions, Switchboard's mission is to make things easier.
Step 2 - Calculating Taxable Fuel Tax Gallons
Now that we have one of the most tedious parts of calculating your IFTA, let’s move on to the next step.
Add up the number of gallons of fuel you’ve purchased in each state. It’s important to note that even if you don’t buy any fuel in a particular state that you need to include in your report, fuel tax will still be calculated.
First, you need to calculate how many gallons of fuel you burnt per mile traveled (fuel mileage).
- Add up the total number of gallons of fuel you have purchased (while you’re at it, jot down how much fuel tax you paid in each state – more on this in later)
- Add up the total number of miles traveled across all states
- Divide the total number of gallons of fuel by the total number of miles
- Multiply your fuel mileage by the miles driven in each state (from step 2)
Fuel Mileage = Total # of gallons of fuel ÷ Total Mileage
Now that you have your Fuel Mileage, you can calculate how much fuel you’ve burnt in each state.
Fuel Usage for [State/Province] = Fuel Mileage x Miles Driven in [State/Province]
Calculating Total IFTA Fuel Tax Amount
The last step is to find the difference between the fuel tax you need to pay and the fuel tax you have already paid.
To calculate the tax required for each state/province, you will need to look at the tax rate for that region.
Fuel Tax for [State/Prov.] = Fuel Usage for [State/Prov.] x Tax Rate for [State/Prov.]
To find out the tax rate for particular State/Provinces, visit: https://www.iftach.org/taxmatrix4/
Special Surcharges: Some states require an additional surcharge fee (Indiana, Kentucky, and Virginia). This is calculated in the same way as above, except you multiply your Fuel Usage by the Surcharge Rate this time.
Step 3 - Calculating IFTA Fuel Tax Paid & Owed
Remember earlier when we suggested you write down how much fuel tax you paid in each state? Now it’s time for us to put that to use.
The amount of tax you owe per state/province: The fuel tax required for each state/province minus how much you have already paid in fuel tax for that province.
Fuel Tax Owed for [State/Prov.] = Fuel Tax Required [State/Prov.] — Paid [State/Prov.]
If you get a negative value for Fuel Tax Owed, don’t worry. It simply means you’ve paid more tax in that state than you actually burnt in fuel. This one’s simple.
All you have to do is add together the Fuel Tax Owed we just calculated for all states, and including any negative values from there.
Total Fuel Tax Owed to IFTA = Sum of tax owed in every state
Step 4 - Filing Your IFTA Return
Depending on your state, you may either have an online IFTA filing portal, or you may be required to do a paper filing.
Regardless, you now have all the information required to make that process hassle free.
When do you need to file your IFTA return?
You will need to file your IFTA return every quarter.
To keep it simple, here’s a chart that will show you when you need to file your IFTA return by.
Preparing for Audit
Audits can be daunting.
Some companies have lost thousands of dollars in fines and penalties, or worse, closed down their businesses, due to findings from IFTA audits.
It is important that you understand the IFTA regulations clearly, and have a robust measurement and reporting process that is considered transparent and sufficient by their standards.
Beyond just looking at the reports, they will rigorously analyze your process. Here are a few of the steps they undergo:
- They will need to understand the ins and outs of your IFTA reporting process
- If the auditor discovers any gaps in the process, they will perform a
- Test of Compliance – If the way they collect IFTA data is inadequate, the auditor will go through your report in more detail, to ensure you are compliant
- If they deem your process or data unreliable, they have the authority to report it to your licensee
This is why we recommend you either build out an error proof documentation and reporting process, or leverage a simple and robust solution like Switchboard IFTA Automation to help save you time while keeping you compliant.
IFTA calculation and filing and what this means for you
Make sure you give yourself enough time to collect all the documentation you’ll need for filing your IFTA report. We know this process can be quite tedious and time consuming, so hopefully this article helped alleviate some headache.
Calculating IFTA mileages using cities & trip sheets? Access our free Switchboard Mileage Calculator today to calculate distances in states & provinces instantly.
If you want to save time and simplify your own IFTA reporting process, make sure to request a demo of our IFTA Automation solution, and our team will get you set up with a free trial should you want to give it at try.