The internship income should be reported on her return as 1099-MISC income. When running the 1099-MISC interview, there is a box to check for "this was a scholarship or fellowship."
There are a series of questions designed to test whether this ia earned income that she should answer no (no intent to earn a profit, not similar to other paid work, not planning to do the same work in the future, etc.)
It should not affect your AOTC, since it was not a scholarship.
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@RobertG - I have desktop Deluxe. I do not see Scholarship as an option at the 1099-Misc interview.
@laura_ron _ I agree with RobertG, it should be reported as Other Income on line 8 of Schedule 1. She should answer no (no intent to earn a profit, not similar to other paid work, not planning to do the same work. only got it in 2019). Otherwise it will be treated as Self employment income and she will have to pay about 14% Self employment (social security and medicare) tax. But, since it will not be classified as earned income and is more than $1100, she may be subject to the "kiddie tax" (usually less than self employment tax)
That income does not prevent her from being your dependent, so you can claim the AOTC. There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. Most students can continue to be their parent's dependent until they turn 24.