How old is she? None of those are right. But #2 is the closest. If she is under 19 or under 24 and a full time student you claim her as a dependent and she can not claim her own personal exemption. Will you be giving her a W2 or a 1099Misc? There are special rules for employing your child that I don't know. Like I think you don't have to hold out SS and Medicare.
Her income would only go on her return. You don't report it on yours. If it is on a W2 she doesn't have to file for less than $6,350 except to get back any withholding taken out. If she gets a 1099Misc she does have to file a return and report it as self employment income.
