Coordinate contributions to a child's Education Savings Account with other family members. The $2000 annual limit is per child not per contributor.
Money in the name of a child will usually affect financial aid more than money in the name of the parent. Education Savings Accounts and Qualified Tuition Plans owned by students may be treated as either a student or a parent asset, depending on circumstances. Accounts owned by third parties may result in non-taxable income to the beneficiary, affecting aid calculations.
Contributions to a qualified tuition program of up to $70,000 ($14,000 X 5, for 2013) can be made in one year but treated as made over up to five years to avoid gift tax issues. Contributions to an Education Savings Account (ESA) are not eligible for this treatment. Contributing to an ESA in the same year you make a contribution greater than the annual gift tax limit to a tuition program will reduce the amount of the tuition program contribution you can exclude from gift taxes for each of the five years.
You may contribute to an Education Savings Account and a Qualified Tuition Program in the same year. Both contributions are gifts and may trigger gift tax if total contributions in one year for the same student are more than the annual gift tax limit ($14,000 for 2013, $28,000 for a married couple splitting the gift; indexed for inflation).
Delay using strategies that will increase your taxable income, such as withdrawing money from retirement IRAs, until late in the junior year or senior year of college, when it won't affect eligibility for financial aid.
The strategy of gifting investments to a child, in order to be taxed at their (presumably) lower tax rate on the sale has limited benefit under today’s income tax rules. Unearned income over $1800 for any dependent up to the age of 18 and fulltime students under the age of 24 is taxed at the parent’s rate.
Different tax breaks have different requirements for qualified expenses. Match funds from different sources with the right type of college expenses.
Check to see who must pay the educational expenses in order to claim the tax benefit. The tax benefit may be lost if the wrong person pays the expense. Check IRS Publication 970 for details and examples.