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Friday, July 27, 2012

How You Use Coverdell Accounts (or Why You Don\'t)


In this weekend's Your Money column, I took a look at Coverdell education savings accounts, which offer a tax break to people who save money and then use the proceeds for education. The quirk with Coverdells is that people get the break when using the money to pay for tuition at private or religious elementary and secondary schools, though they can use it for college expenses as well. The more well-known 529 college savings plans offer no such tax benefit for people paying primary or secondary school tuition.

No one seems to track how people are using Coverdells, but I'd like to take an unscientific poll here. If you've used the accounts, how have you used them? What tax savings, if any, have you achieved? And if you've considered Coverdells for kindergarten through 12th grade tuition savings and then rejected the idea, why did you do so?