| Article Source: MiNeeds.com, where consumers | | | | elementary or secondary education as determined |
| get competitive bids from Accountants | | | | under state law |
| CPA’s. Read reviews, compare offers & | | | | • The Hope and lifetime learning credits can be |
| save. It’s free! | | | | claimed in the same year the beneficiary takes a |
| Article Link: | | | | tax-free distribution from a Coverdell ESA, as long |
| Tags: MiNeeds, Accountants / CPAs, Claremont, | | | | as the same expenses are not used for both |
| CA, 91711, Leyva Business Services, Ron, Leyva, | | | | benefits |
| Saving Money for College? Think about a | | | | • If the distribution exceeds education |
| Cloverdell Education Savings Account | | | | expenses, a portion will be taxable to the |
| A Coverdell Education Savings Account is an | | | | beneficiary and will be subject to an additional |
| account created as an incentive to help parents | | | | 10% tax. Exceptions to the additional 10% tax |
| and students save for education expenses. | | | | include the death or disability of the beneficiary or |
| The total contributions for the beneficiary of this | | | | if the beneficiary receives a qualified scholarship |
| account cannot be more than $2,000 in any year, | | | | There are contribution limits for taxpayers based |
| no matter how many accounts have been | | | | on the taxpayer's Modified Adjusted Gross |
| established. A beneficiary is someone who is | | | | Income. Contributions to a Coverdell ESA may be |
| under age 18 or is a special needs beneficiary. | | | | made until the due date of the contributor's |
| The beneficiary will not owe tax on the | | | | return, without extensions. |
| distributions if they are less than a beneficiary's | | | | If there is a balance in the Coverdell ESA at the |
| qualified education expenses at an eligible | | | | time the beneficiary reaches age 30, it must be |
| institution. This benefit applies to higher education | | | | distributed within 30 days. A portion representing |
| expenses as well as to elementary and secondary | | | | earnings on the account will be taxable and |
| education expenses. | | | | subject to the additional 10% tax. The beneficiary |
| Here are some things to remember about | | | | may avoid these taxes by rolling over the full |
| Distributions from Coverdell Accounts: | | | | balance to another Coverdell ESA for another |
| • Distributions are tax-free as long as they are | | | | family member. |
| used for qualified education expenses, such as | | | | See IRS Publication 970, Tax Benefits for Higher |
| tuition, books and fees | | | | Education. |
| • There is no tax on distributions if they are | | | | Was the Article Useful? |
| for an eligible educational institution. This includes | | | | I hope you enjoyed the article! |
| any public, private or religious school that provides | | | | |