You may be able to save for your child’s or grandchild’s education with a Coverdell Education Savings Account (ESA). There’s no upfront federal tax deduction for contributions, but the earnings grow tax-free. No tax is due when the account funds are withdrawn, to the extent the amounts don’t exceed the child’s qualified education expenses. Qualified expenses include college tuition, fees, books and room, as well as elementary and secondary school expenses. The annual contribution limit is $2,000 a year from all contributors for all ESAs for the same child. The amount you can contribute is phased out if your modified adjusted gross income exceeds $95,000 ($190,000 for married joint filers).
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