My daughter is just starting the 10th grade, and I have a Coverdell education savings account for her. I understand that even though she’s still in high school, I can tap the account tax-free for certain expenses. Which ones qualify?
You can use the money in your Coverdell for a number of educational expenses for private or public school. Unlike 529 college-savings plans, Coverdell education savings accounts can be used tax-free for college costs as well as many expenses for primary and secondary education (kindergarten through high school).
Some of the expenses have to be required by the school to be eligible; others do not, says Rande Spiegelman, vice-president of financial planning at Charles Schwab. You can use the money for fees, books, supplies, equipment and academic tutoring, whether or not they are required by the primary or secondary school. Special-needs beneficiaries can also use the money for certain services. Computers, equipment and Internet access for educational purposes can qualify, too. You can also use the money for room and board, uniforms, transportation or other supplementary services (such as extended-day programs) but only if they are required or provided by the school. (See IRS Publication 970, Tax Benefits for Education, for more about eligible expenses.)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
To qualify to make Coverdell ESA contributions in 2014, your modified adjusted gross income must be less than $110,000 if you’re single or $220,000 if married filing jointly. For more information about Coverdell ESAs, see Another Way to Save for Education. For a list of brokerages and fund companies that offer low-cost ESAs, see SavingforCollege.com.
-
Do You Feel Like Somebody’s Watching You? It's Your CarWhat's worse, you gave your vehicle manufacturer permission to watch you — no matter what you're doing. What are the car companies doing with that information?
-
Stock Market Today: Dow Logs Longest Losing Streak Since AprilThe November Producer Price Index showed that inflation remains a tough beast to tame.
-
Five Tax-Savvy Ways To Donate This Holiday SeasonCharitable Donations Food pantries, toy drives, and animal sanctuaries are popular ways to support others year-round.
-
Can Tariffs Make Childcare More Affordable?Tariffs President-elect Trump suggested tariffs can address the childcare crisis, but economists are doubtful.
-
Are You a Renter? You Could Save on TaxesTax Breaks With these tax savings at your fingertips, rent may be more affordable
-
2025 Open Enrollment: Some DACA Recipients Can Purchase Affordable Care Act Health InsuranceOpen Enrollment Your eligibility to purchase health insurance from the federal marketplace may have changed. Here's what you need to know.
-
Holiday Shopping Tax Tips for Business OwnersTax Deductions Before hitting the sales, businesses should know these key deductions and look out for overspending.
-
NYC Congestion Pricing: Ghost Tax or Necessary Fee?State Taxes Drivers headed to Manhattan’s downtown district will face a new $9 toll in January.
-
Tax Credit vs. Tax Deduction: What’s the Difference?Tax Breaks Your guide to tax deductions and credits, how the IRS treats them differently, and how they impact your tax bill.
-
Premium Tax Credit: Are You Eligible For This Health Insurance Tax Break?Tax Credits The tax credit can help qualifying individuals pay for coverage from the Affordable Care Act’s health insurance marketplace.
