Question

Which of the following choices are characteristics of Coverdell Educational Savings Accounts?

a. The maximum yearly contributions to the account are limited to $2,000 for each beneficiary
b. The maximum yearly contributions to the account are limited to $2,000 per taxpayer ($4,000 for mfj)
c. Reasonable room and board costs are included in qualified higher education expenses
d. Expenses for higher education, such as tuition and books, are NOT qualified educational expenses for this type of account
e. The contribution limit is available to all taxpayers and is NOT subject to any phase out for higher levels of AGI
f. The distributions can be made for qualified education expenses from kindergarten through 12th grade
g. Earnings on the account are NOT taxable if used for qualified educational expenses

Answer 1

Coverdell ESAs allow a max contribution of $2,000 per beneficiary, are available for K-12 and higher education expenses, and offer tax-free earnings for qualified educational expenses.

Step-by-step explanation:

Characteristics of Coverdell Educational Savings Accounts (ESA) include: a. The maximum yearly contributions to the account are limited to $2,000 for each beneficiary. f. The distributions can be made for qualified education expenses from kindergarten through 12th grade as well as for higher education costs. g. Earnings on the account are not taxable if they are used for qualified educational expenses, which can include tuition, fees, books, supplies, and equipment required for enrollment or attendance, and for certain room and board costs for students who are enrolled at least half-time.