J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

33.10 Contributing to a Coverdell Education Savings Account (ESA)

A Coverdell Education Savings Account, or ESA, is a trust or custodial account set up specifically for the purpose of paying the qualified education expenses of the designated beneficiary of the account. A contribution cannot be made for a beneficiary after he or she reaches age 18 unless the beneficiary is a special needs beneficiary, as discussed below. Contributions must be in cash. Coverdell Education Savings Accounts were formerly known as Education IRAs.

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Law Alert

Possible Cutback in ESA Benefits for 2013

Unless Congress extends to 2013 the Coverdell ESA rules in effect for 2012, much less favorable rules will apply in 2013. The contribution limit would fall to $500 per designated beneficiary, and married persons filing jointly would be subject to a less favorable phaseout range. Only withdrawals for higher education expenses would be considered qualified expenses for distribution purposes (33.11). See the e-Supplement at jklasser.com for an update on the rules for 2013.

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Contribution deadline.

The deadline for making a contribution for any year is the due date of your return for that year (not including extensions). You can make a contribution to a Coverdell ESA up until April 15, 2013, and designate it as a contribution for 2012.

Contribution limit for 2012.