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Qualified Higher Education Expenses These are expenses related to enrollment or attendance at an eligible postsecondary school. As shown in the fol- lowing list, to be qualified, some of the expenses must be required by the school and some must be incurred by stu- dents who are enrolled at least half-time. 1. The following expenses must be required for enroll- ment or attendance of a designated beneficiary at an eligible postsecondary school. a. Tuition and fees. b. Books, supplies, and equipment. 2. Expenses for special needs services needed by a special needs beneficiary must be incurred in connec- tion with enrollment or attendance at an eligible post- secondary school. 3. Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below). The expense for room and board qualifies only to the extent that it isn't more than the greater of the fol- lowing two amounts. a. The allowance for room and board, as determined by the school, that was included in the cost of at- tendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. b. The actual amount charged if the student is resid- ing in housing owned or operated by the school. You may need to contact the eligible educational insti- tution for qualified room and board costs. 4. The purchase of computer or peripheral equipment, computer software, or Internet access and related services if it is to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible postsecondary school. (This doesn’t in- clude expenses for computer software for sports, games, or hobbies unless the software is predomi- nantly educational in nature.) Half-time student. A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic workload for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. Qualified Elementary and Secondary Education Expenses These are expenses related to enrollment or attendance at an eligible elementary or secondary school. As shown in the following list, to be qualified, some of the expenses must be required or provided by the school. There are special rules for computer-related expenses. 1. The following expenses must be incurred by a desig- nated beneficiary in connection with enrollment or attendance at an eligible elementary or secondary school. a. Tuition and fees. b. Books, supplies, and equipment. c. Academic tutoring. d. Special needs services for a special needs benefi- ciary. 2. The following expenses must be required or provided by an eligible elementary or secondary school in con- nection with attendance or enrollment at the school. a. Room and board. b. Uniforms. c. Transportation. d. Supplementary items and services (including ex- tended day programs). 3. The purchase of computer or peripheral equipment, computer software, fiber optic cables related to com- puter use, or Internet access and related services is a qualified elementary and secondary education ex- pense if it is to be used by the beneficiary and the beneficiary's family during any of the years the benefi- ciary is in elementary or secondary school. (This doesn't include expenses for computer software de- signed for sports, games, or hobbies unless the soft- ware is predominantly educational in nature.) Contributions Any individual (including the designated beneficiary) can contribute to a Coverdell ESA if the individual's MAGI (de- fined later under Contribution Limits) for the year is less than $110,000. For individuals filing joint returns, that amount is $220,000. Organizations, such as corporations and trusts, can also contribute to Coverdell ESAs. There is no require- ment that an organization's income be below a certain level. Contributions must meet all of the following require- ments. 1. They must be in cash. 2. They can't be made after the beneficiary reaches age 18, unless the beneficiary is a special needs benefi- ciary. 3. They must be made by the due date of the contribu- tor's tax return (not including extensions). Contributions can be made to one or several Coverdell ESAs for the same designated beneficiary provided that the total contributions aren't more than the contribution limits (defined later) for a year. Chapter 6 Coverdell Education Savings Account (ESA) Page 41