Coverdell Education Savings Accounts (ESAs) can help you save for higher education. The annual contribution limit is $2,000, but income limits apply. To see if you qualify, click here. Contributions for tax year 2016 may be made as late as the April tax filing deadline in 2017.
Funds withdrawn from a Coverdell ESA (both contributions and earnings) are tax free if used to pay for the child's qualified education expenses. In addition to college expenses, funds can help pay for your child's elementary and secondary school expenses. Tax-free distributions are not allowed if an education credit is used for the same expenses for the same student.
Grandparents and other family members may make contributions for your children. Corporations and other entities can make contributions as well. So even if you don't qualify, your children can still benefit. However, total contributions received by one child cannot exceed $2,000, regardless of who makes the contributions.