If you are the beneficiary of a Coverdell ESA, you can find your annual earnings and Coverdell basis by reviewing your 1099-Q form. Your basis is the total amount of your Coverdell contributions minus the amount you withdraw that is not taxable.
Who is the owner of a Coverdell education Savings account?
While your child is the beneficiary of the Coverdell ESA, you are the owner of the account. Although you must use the funds to cover your child’s educational expenses, your kiddo does not get control of the fund at any point.
What do you need to know about Coverdell savings accounts?
A Coverdell education savings account (Coverdell ESA) is a trust or custodial account set up in the United States solely for paying qualified education expenses for the designated beneficiary of the account. This benefit applies not only to qualified higher education expenses, but also to qualified elementary and secondary education expenses.
What are qualified education expenses for a Coverdell?
What are qualified education expenses for a Coverdell? You can generally use tax-free education savings account withdrawals for more than just the cost of school (tuition and fees). It’s also possible to pay for books, equipment, supplies or even to buy a computer with tax-free Coverdell ESA distributions.
What can Coverdell ESA funds be used for?
Coverdell ESA funds can be put toward qualified education expenses for any level of education. For elementary and secondary school, qualified education expenses can include room and board (if attending boarding school), transportation, academic tutoring, after-school programs and expenses for special needs educational resources.
Who is the beneficiary of a Coverdell CESA?
A parent, grandparent or other relative can open this education savings account and designate the beneficiary. It’s even possible to open a CESA in addition to a 529 plan or other education savings account.
