Probably. It depends on how much she made, her age and student status.
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, a relationship test and residence
test. Only a QC qualifies a taxpayer for the Earned Income Credit and the Child
Tax Credit. They are interrelated but the rules are different for each.
A custodial child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:
1. He is under age 19, or under 24
if a full time student for at least 5 months of the year, or is totally & permanently
disabled
2. He did not provide more than 1/2 his own support. Scholarships are
considered third party support and not as support provided by the student.
3. He lived with the parent
(including temporary absences such as away at school) for more than half
the year
So, it doesn't matter how much he earned. What matters is how much he spent
on support. Money he put into savings does not count as support he spent on him
self.
If your grandchild does not meet the Qualifying child rules, she can still be a qualifying relative if she made less than $4150 for the year
