You have until April 15, 2003, to make contributions to a child’s Coverdell education savings account (ESA) for 2002. The maximum contributions are $2,000 per child per year. If you wait until 2003 to make contributions for 2002, will the contributions count as gifts in 2002 or 2003?
The IRS has not yet issued any formal set of regulations covering Coverdell ESAs. Some tax pros believe that such contributions will count as gifts in the year you make the contribution, even if you choose to label it as a prior year contribution.
If you are well below your $11,000 annual gift-tax exclusion limit for the total amounts of gifts being made to any one individual in a given year (including ESA contributions and 529 plan contributions), the answer should not make any difference. But if you think you may be close to the exclusion limit in 2003, you might want to make 2002 ESA contributions before year-end.
