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I will address the various questions you posed. In terms of claiming your college student daughter's income on your tax returns, you should not claim their earned income on your return. If your student files their own tax return, you can still possibly claim her as a dependent, but you shouldn't claim her income on your return, regardless.

Generally, a parent can claim their college student children as dependents on their tax returns. However, to claim a college student as a dependent on your taxes, the Internal Revenue Service has determined that the qualifying child or qualifying relative must:

• Be younger than the taxpayer (or spouse if MFJ) and:
  • Be under age 19,
  • Under age 24 and a full-time student for at least five months of the year.
• Or the child can be any age if totally and permanently disabled.
• Have lived with you for more than half the tax year. There are exceptions for temporary absences during the tax year, such as when your child is away at school. For example, if the child went away to college and planned to return home, then that temporary absence while away at college, can count as if they lived with you.
• Not provide more than half of their own support. (You provided more than half their support). Here are some guidelines:
  • Support includes expenses like:
    • Food
    • Clothing
    • Lodging
    • Dental or medical expenses (out of pocket)
    • Education
  • College student loans count as support by the person responsible for the loan repayment. Nontaxable scholarships don’t count as a dependency exemption here. Some taxpayers ask us if they can claim a dependency exemption (in tax terms: a dependent exemption). The availability of a dependent exemption is no longer available after 2017 tax reform.
  • As long as your child didn’t pay more than half of all these expenses, you meet the support test. 

If you claim your daughter, she will need to file a tax return to claim a refund for any withholdings. Also, she will want to be sure that she indicates on her tax returns that someone else can claim her.