Private Schools

[SueBaby]

Can anything at be taken on private schools? My clients said "he heard" that their uniforms , shoes, tution, lunches ---etc. I have looked and only found daycare and after school care not private schools. My answer to him was no. Wanted to be sure. Thanks!

[Lion]

Coverdell

He can take a Coverdell distribution to use for private school tuition.

[SueBaby]

He can take a Coverdell distribution to use for private school tuition.

I have never used Coverdell; can you explain and where does that go on taxes? Do I use the whole amount which is over $18,000 (for 3 children) or a percent? Like I said never used it before. Looked in Tax Book and it doesn't go into depth about it. Thanks for any thing on this matter for me.

[MariaR08]

The Coverdell Education Savings Account (ESA) needs to be established first. Once it's established, contributions are made (pre-tax) as money set aside to pay for educational costs (including private schools). Distributions are then taken to pay for these costs.

Here's two links to get you started:

http://www.savingforcollege.com/intro_to_esas/

http://www.statefarm.com/learning/life_stages/college_fund/coverdel.asp

~Maria

[travis bickle]

Can you give me a cite

The Coverdell Education Savings Account (ESA) needs to be established first. Once it's established, contributions are made (pre-tax) as money set aside to pay for educational costs (including private schools). Distributions are then taken to pay for these costs.

that says contributions are made pre-tax?

I know that distributions are tax-free [i.e., no tax on growth] (distributions taken must not exceed educational expenses, or they are taxable) but I have never seen anything saying contributions are tax-free.

Thanks in advance,

[SueBaby]

The Coverdell Education Savings Account (ESA) needs to be established first. Once it's established, contributions are made (pre-tax) as money set aside to pay for educational costs (including private schools). Distributions are then taken to pay for these costs.

Here's two links to get you started:

http://www.savingforcollege.com/intro_to_esas/

http://www.statefarm.com/learning/life_stages/college_fund/coverdel.asp

~Maria

Thank you very much that helps alot.

[MariaR08]

that says contributions are made pre-tax?

I know that distributions are tax-free [i.e., no tax on growth] (distributions taken must not exceed educational expenses, or they are taxable) but I have never seen anything saying contributions are tax-free.

Thanks in advance,

Sorry, I posted without having had my morning coffee yet and my typing went ahead of my train of thought =)

Meant distributions are tax-free. But either way, the links provide some more information on the specifics.

[FEDUKE404]

More info on Coverdell ESA

The Coverdell ESA is the replacement name for the "Education IRA" of years gone by.

As discussed above, funds placed into the account generate no tax savings but earnings, hopefully over a number of years, are generally not subject to tax.

Distributions are reported on Form 1099-Q, which can be an experience in itself.

Valiant effort to try to deduct unis, lunches, etc!

On a more positive note, funds lurking in a Coverdell account can be used for elementary or secondary (high school) qualifying education expenses, as well as college. Sometimes that is a wise move so as not to interfere with potential education credits for college. You're not really deducting anything but instead just not paying taxes on the earnings.

I think you currently can put $2k into account(s) for any single individual. That amount was raised from much lower annual limits, which hardly justified the extra paperwork to establish the accounts at a bank or brokerage firm.

Hope this makes sense....

FE