What expenses can a Coverdell be used for?

Coverdell account funds must be used to pay for qualified K-12 or college expenses at an accredited educational institution, including tuition, books, supplies, and in some situations, room and board. For K-12 students, funds may be used for such expenses as tutoring, computer technology and equipment, and Internet service. However, if funds are not used for a qualified purpose, they are subject to income tax and an additional 10% penalty.