Recent statistics show Americans are simply not saving money for the future. To encourage savings, the government has come up with tax incentives.
Tax Incentives for Saving for Education
Higher education in America is an expensive proposition. If you have a child in college, I hardly need to tell you this. While every parent is proud of a child pursuing education, the glorious event can make for some sleepless night when thinking about how to pay for it. If you have young children, the government has taken steps to make saving for college attractive from a tax perspective.
There are a number of different tax incentives to promote saving for education. One such program is known as the Coverdell.
A Coverdell account is designed to promote education savings by removing part of the tax penalty of doing so. The basic idea is that any money distributed from the account will not be taxed so long as distributions dont exceed the expenses of pursuing education. Here is how it works.
An account is set up for a beneficiary the child. You can open one account per child and contribute up to $2,000 a year. The beneficiary must be under 18. Obviously,...
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