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The Coverdell Education Savings Account was created as a way to save for a child’s educational expenses, from kindergarten through college. The account provides a way for interest earnings to be distributed potentially tax-free, if used to pay for qualified education expenses.
Contribution Eligibility and Amount
There is no requirement that an individual who funds a Coverdell Education Savings Account have earned income, however if the contributor's income is above certain levels, they may not make a contribution to a Coverdell Education Savings Account. Contributions to a Coverdell Education Savings Account are not tax-deductible. While not tax-deductible, check with your tax advisor regarding the tax-deferral benefit this account can offer.
Coverdell Education Savings Account Allowable Contribution Amount:
| Modified Adjusted Gross Income (MAGI) - Single Filers |
Contribution Allowed |
|---|---|
| Less than $95,000 | Full $2,000 |
| Between $95,000 & $110,000 | Partial contribution allowed |
| Over $110,000 | No contribution allowed |
| Modified Adjusted Gross Income (MAGI) - Married, Joint Filers |
Contribution Allowed |
|---|---|
| Less than $190,000 | Full $2,000 |
| Between $190,000 & $220,000 | Partial contribution allowed |
| Over $220,000 | No contribution allowed |
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