Income reported on your child's form 1099-MISC is self-employment income. She is required to file her own tax return if her self-employment income is over $400. She'll have to pay self-employment tax calculated at the rate of 15.3% on 92.35% of her income.
You can still claim her as a dependent. She has to indicate on her tax return that she is claimed as a dependent by someone else in the Personal Info section of TurboTax.
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