Coverdell Education Savings Account (LO. 10) Alex and Carmin are married and hav
ID: 2576228 • Letter: C
Question
Coverdell Education Savings Account (LO. 10) Alex and Carmin are married and have two children, ages 6 and 3. Their adjusted gross income for the year is $117,300. The total amount contributed to an individual's Coverdell Education Savings Account is limited to $ If their adjusted gross income is $208,000, the maximum contribution that can be made to each child's education savings account is (Hint. The amount an individual can contribute to a CESA is phased out ratably for married taxpayers filing a joint return with adjusted gross income between $190,000 and $220,000.)Explanation / Answer
The total amount contributed to an individual's Coverdell Education Savings Account is limited to $2,000 per child Maximum Contribution $2,000 MAGI $ 208,000 Phaseout Threshold $190,000 Phaseout Limit $220,000 Phaseout Reduction $1,200 =(MAGI – Phaseout Threshold)/(Phaseout Limit – Phaseout Threshold) × Maximum Contribution (208000-190000)/(220000-190000) x $2000 Contribution Limit $800 = Maximum Contribution – Phaseout Reduction Part 1 Ans $2,000 Part 2 Ans $800 For any query, please comment.