Formerly known as Education IRAs, Coverdell Education Savings Accounts (CESAs) are a means of saving up for your children's education expenses. Set up for anyone under the age of 18, the money from a CESA can be used for any education-related expenses from elementary school through college tuition. This is unique, in that most savings plans are geared for only higher education.

If your modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing jointly), you may be able to establish a Coverdell ESA to finance the qualified education expenses of a designated beneficiary. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return.

There is no limit to the number of separate Coverdell ESAs that can be established for a designated beneficiary. However, total contributions for the beneficiary in any year cannot be more than $2,000, not matter how many accounts have been opened. You also do not pay taxes upon withdrawing the money, although the initial contributions are not tax-deductible.