• The Coverdell ESA, or Education Savings Account, is a special account for those saving for a child's education. The government is willing to give account holders a tax break if this money is designated an educational savings account. Not every account can fulfill the requirements of the account, but if you qualify, you can save for your child's education expenses and have the entire amount applied to education expenses rather than some of it going for taxes.
  
  

Who can contribute?

• Contributers to the Coverdell ESA are under monetary guidelines for eligibility. You must have a gross income of $110,000 or less to be able to take advantage of this plan. Couples filing jointly are allowed an income of $220,000.
  
  

How much?

• There can be any number of accounts for the same beneficiary. If the parents want to open a separate account from the grandparents, this is legal. The total amount contributed to each beneficiary cannot be over $2000 per year.
  
  

When to contribute?

• Contributions can be made at any time during the year for any Coverdell ESA. All contributions must be made before the beneficiary turns 18, unless she is a special needs student.
  
  

Tax benefits

• Contributions to a Coverdell ESA are not tax deductible. The beneficiary of the account does not have to pay taxes on any amount received, as long as the received amount is less than the education expenses he has incurred during the year.
  
  

What can it be used for?

• The Coverdell ESA can be used for any education expenses of the beneficiary, from kindergarten to college. They can be used for private as well as public schools. Education expenses such as tuition, books, equipment, room and board and tutoring can all be covered by this account.