Am I eligible to contribute to an ESA?
Parents, grandparents, family, friends, the child, and any other individuals are eligible to contribute to an ESA as long as their modified adjusted gross income (MAGI)* does not exceed the eligibility limits (see below). Organizations, such as corporations and trusts, also may contribute and do not need to meet the MAGI requirements.
|Modified Adjusted Gross Income Limits|
|Married, Joint Filer||$190,000–$220,000|
*MAGI is your adjusted gross income from your federal tax return Form 1040 or 1040A with the following added back: foreign earned income exclusion, foreign housing deduction or exclusion, and income exclusions by residents of American Samoa or Puerto Rico. If your income exceeds the MAGI limits, you can gift money to a child and, assuming the child meets the income limits, the child can then make the contribution. The Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART) allows survivors to contribute military death gratuity and Servicemembers’ Group Life Insurance payments (treated as “rollover contributions”) to ESAs. To learn more about Coverdell ESAs, see IRS Publication 970, Tax Benefits for Education.
How much can I contribute to an ESA?
Assuming you’re eligible to contribute, you can contribute up to $2,000 per year to an ESA per child. For example, if you have two children and each child has an ESA, you can contribute up to $2,000 to each ESA for a total annual contribution of up to $4,000. But any one child may not receive more than $2,000 total per year in ESA contributions, even if the child has more than one ESA.
What is the deadline for making ESA contributions?
You can contribute to an ESA any time after a child is born for each year up until his 18th birthday. The contribution deadline is your tax return filing due date, not including extensions. For most people, this date is April 15. For example, you can make your 2016 tax year contribution any time between January 1, 2016, and April 18, 2017.
You can contribute to an ESA any time after a child is born, up to his or her 18th birthday. For special needs beneficiaries, you can continue to make contributions beyond age 18. A special needs beneficiary is described as someone who requires additional time to complete his or her education because of a physical, mental, or emotional condition, including a learning disability.
What investments can I choose for my ESA contribution?
You can invest your contributions in any qualifying investments available through the ESA custodian or trustee, including certificates of deposits (CDs), share certificates, mutual funds, stocks, and bonds. Life insurance is not considered a qualifying investment.