COVERDELL: CALCULATION OF REDUCTION
01.Core Concepts
CONTRIBUTIONS EXAMPLE Ziggy and his wife, Marley, would like to make a contribution to a Coverdell Education Savings Account for their son, Jethro. Ziggy and Marley are married filing jointly and their AGI is $200,500. Because they are in the phase-out range, Ziggy and Marley will not be able to make the maximum contribution of $2,000. Instead, thei r contribution will be reduced by $700. Their contribution limit is $1,300 ($2,000 - $700). = $700 (Reduction) $200,500 - $190,000 $2,000 x $220,000 - $190,000 $2,000 - $700 = $1,300 Contribution