Biofuel is a sustainable and clean energy source made from vegetable oils and animal fats, but it is more expensive than conventional fuel. The US biofuel tax credit pays qualified businesses and producers to offset costs and encourage use. Receipts must be saved for purchases to receive the correct amount of credit. Rules differ for homeowners, businesses, and producers.
Biofuel, which is a more processed version of biodiesel, comes from vegetable oils and animal fats. It is a sustainable and clean form of energy that can emulate the energy production of conventional diesel and other fuels. The cost of biofuel is higher than that of conventional fuel, so many businesses and homeowners do not use it. As of 2011, a biofuel tax credit in the United States pays qualified biofuel businesses, owners, and producers to offset higher costs of production and use and to encourage more people to use biofuels.
The biofuel tax credit refers primarily to the amount of biofuel that is used or sold. To get the biofuel tax credit and avoid unnecessary audits, it is important to save receipts for biofuel and biodiesel purchases. This also ensures that people who apply for biofuel tax credits receive the correct amount of credit towards their taxes. If biofuels are produced, only the amount of biofuel sold can be applied toward a biofuel tax credit, and there are special rules the producer must follow.
For homeowners and businesses that do not sell biofuel, the tax credit form asks how much biofuel was used. The biofuel can be used for regular operation such as heating and air conditioning. As long as the biofuel is used, it can be applied to the tax credit. Both pure biofuels and biofuels blended with conventional fuels can be used to claim the tax credit.
Companies that sell biofuels follow the same rules. Unlike homeowners and other businesses, however, both the amount of biofuel used and the amount sold count toward the tax credit. So, if 15 gallons (56.7 liters) of biofuel are used and 20 gallons (75.7 liters) are sold, the 35 gallons (132.4 liters) are credited to business taxes.
The rules for obtaining a biofuel tax credit are more structured and stricter for biofuel producers. To be eligible, the biofuel producer must be considered a small biofuel producing company. This means that the business, during the entire fiscal year, only has a production capacity of 60 million gallons (227,124.7 kiloliters) or less. Only up to 15 million gallons (56,781 kiloliters) can be declared for tax credits.
Along with the mentioned rules, the producer must sell the biofuel to a person or company or use the biofuel for specific uses. The biofuel must be used in a biofuel blend, by a business for any reason, or sold to a retailer or owner. Biofuel not used for these purposes does not count for tax credit purposes.
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