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James Madison Preparatory School is an Arizona charter school, which means that it is a public school operated by a private organization. As such, the school does not charge tuition for students to attend. In order to operate both its academic and extracurricular programs, it is necessary that the school charge fees, require deposits, and receive gifts in the way of donations to support the work of the school. The school is also a 501c3 tax exempt organization, which means that it is considered a charitable organization. Donations to the school may be considered charitable donations for your state and/or federal income taxes.
This guide seeks to:
- describe the differences between various forms of payment;
- help clarify how these payments benefit the school, the student and his/her family; and
- establish sensible procedures regarding the various forms of payment made to the school, including:
Nothing in this guide is designed to serve as a substitute for professional financial or tax advice regarding your particular family financial or tax situation. For more information contact the Arizona Department of Revenue at www.revenue.state.az.us or 800-352-4090 or 602-255-3381.
Fees
A fee is defined as money paid directly to the school to cover costs of academic or student supplies. Fees are non-refundable and may not be claimed as donations for income tax or other purposes because there is a direct benefit, service, or product received by the student for the fee. Fees may or may not be optional. Examples of supplies for which fees are charged include: computer usuage, field trips, student travel, student ID, special school outings, or DVD's or recordings of school events, and yearbooks. The amount of the fee is set by administration. Parents and students are notified of fees in writing in enrollment materials, in the Family Handbook, in the Extracurricular handbook, or in specific handouts provided by a teacher, coach, or administration. The school provides a receipt for all fees.
Activity Fees
Activity fees are charged to students by the school for extracurricular activities in fine arts, athletics and clubs. When the school charges these activtiy fees it is to help make activities and programs possible. Activity fees are designed to reflect a reasonable cost to the students' families for specific activities, and are generally due to the school prior to the start of an activity/program. Activity fees for extracurricular activities can be applied to your AZ Tax Credit contribution, but this must be declared at the time the activity fee is paid. A reciept is provided for your contribution.
Click here to make AZ Tax Credit contribution and pay fees for extracurricular activities.
Deposits
Deposits are defined as money paid directly to the school or outside organization, to be held by the school or outside organization as security for a specific item or activity. Deposits are refundable, and the deposit is returned to the student's family if the items are returned in good condition or if the conditions of the deposit requirements are met. Most deposits required by the school do NOT cover the cost of replacing the items for which the deposit is held in security.
While the school sets the amount of most deposits and holds those deposits as security, there are times when the cost of a given deposit is set by an outside organization and deposits are held by that outside organization. The school is not responsible for deposits required or held by outside organizations.
Deposits provide a benefit to the school and the student by promoting responsible behavior. When the student fulfills the requirements of the deposit, the deposit is returned. If the student does not meet the requirements of the deposit, the school is able to utilize the deposit to help defray the costs of replacement.
The school charges a deposit for books. As long as a student returns his/her books in good condition, the deposit is returned. If some or all of the student's books are returned in poor condition or are not returned, the student's deposit is charged for the replacement value of the missing/damaged item(s), and the student may be billed for the cost of replacement not covered by the deposit.
The school's students are sometimes required to pay a deposit to an outside organization, e.g. student travel. While this deposit may be received by the school, it is turned over to the outside organization and it is the responsibility of that outside organization.
When a deposit is required by the school or an outside organization, the payment for the deposit should be made SEPARATELY from other fees or payments. This may mean a separate check or other separate transaction.
The school provides a receipt for all deposits.
Charitable Donations
The school receives donations from individuals and organizations throughout the year. Donations made to the school come in three basic forms: financial, material, and in-kind. Because James Madison Preparatory School, Inc., is a 501c3 tax exempt organization, donations may be considered tax-deductible for federal income tax purposes. Please check with your tax advisor for specific details.
Financial donations are gifts of money made to the school to support the operations and activities of the school. These donations may be given to the school to use as administration sees fit, or the donation(s) may be designated for a specific program or activity. In general, financial donations can be claimed directly on the donor's tax return, but please check with your tax advisor for specific details. Click Here to Donate!
Material donations are items of value or utility given to the school as gifts. Material donations may be used directly by the school or sold for money to benefit the school. In the past, the school has received material donations like vehicles, computers, audio-visual equipment, paper products, tools, etc. When the school uses a material donation on campus, the donor may claim fair market value for the material donation. When the school sells the material donation for money, the donor may claim the donation for only the amount the school received for the item. It is the donor's responsibility to determine fair market value and sold donation value. Please check with your tax advisor for specific details.
In-kind donations are given to the school by individuals or organizations. An in-kind donation is a gift of services rendered or donated volunteer time. In the past, the school received a variety of in-kind donations, including professional services (e.g. legal, financial, or educational), specific trade services (e.g. plumbing, electrical, carpentry, roofing, etc.), and volunteer services (e.g. office help, coaching, chaperoning school field trips). When the school receives an in-kind donation, it is the responsibility of the donor to establish fair market value of the gift of time or services. Please check with your tax advisor for specific details.
General donations must be declared at the time they are given, and the school will provide a receipt or letter of receipt as appropriate. General donations cannot be changed to another form of gift or donation later.
Some employers will match all or some of an individual's donation to Madison Prep. Please check with your employer for details about this opportunity to make your donation work even harder for Madison Prep.
The school provides a receipt for all donations.
Arizona Tax Credit Contribution
The Arizona legislature enacted Arizona Revised Statute 43-1089.01 in order to provide Arizona taxpayers with a tax credit for their contributions to public schools (including charter schools), to be used to support extracurricular activities.
Because Madison Prep cannot use state dollars to pay for extracurricular activities, Tax Credit contributions are essential to help pay for these important enrichment activities. This is the single best way for friends of the school to support extracurricular activities. Arizona Tax Credit contributions must be declared at the time they are given, and other types of donations cannot be changed to AZ Tax Credit contributions later.
but this must be claimed at the time the activity fees are collected.
In Arizona, an individual taxpayer may donate up to $200 to the school (or schools) of his/her choice as an Arizona Tax Credit contribution. A married couple may donate up to $400 as an AZ Tax Credit contribution. The Tax Credit contribution can then be claimed by the donor on their state income taxes as a credit, and the money is subtracted from the donor's state tax obligation. For example, let’s say you and your spouse have an adjusted gross income (AGI) of $60,000 in 2008. In February, 2009, you sit down to do your taxes. Let’s pretend for the sake of simplicity that the state tax rate is a flat 3%. Your state tax would be $1,800. However, since you donated a $400 tax credit, you immediately reduce that figure to $1,400. That’s the final amount of state tax you owe. To complete the scenario, let’s pretend that your W-2 form shows that you’ve paid all of the $1800 you owe the state of Arizona from your wages during the course of 2008. When you file your taxes, the state of Arizona will issue you a refund of $400! Please see your tax advisor for details.
The State of Arizona Department of Revenue requires that certain taxpayer information be included with all AZ Tax Credit contribution(s), including each donor's social security number. The school is required to report all AZ Tax Credit donor information to the state on an annual basis, and the donor's information must be correctly recorded in order for the donor to take advantage of the AZ Tax Credit on their state taxes. James Madison Preparatory School does not share this personal information with any other entity than the AZ Department of Revenue, and takes all reasonable precautions to maintain the security of this information, including secure storage and destruction of records.
The school provides a receipt for all Tax Credit contributions. Click here to make an Arizona Tax Credit contribution >>