To elaborate on what @arrasre has correctly stated, there are two types of dependents, and the rules are different for each type. See this discussion from TurboTax.
Qualifying child
"To claim a qualifying child, you must be able to answer "yes" to all of the following questions.
- Are they related to you? The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, adopted child or an offspring of any of them.
- Do they meet the age requirement? Your child must be under age 19 or, if a full-time student, under age 24. There's no age limit if your child is permanently and totally disabled.
- Do they live with you? Your child must live with you for more than half the year, but several exceptions apply.
- Do you financially support them? Your child may have a job, but they cannot provide more than half of their own support."
Qualifying relative
" Here's a checklist for determining whether your parent (or other relative) qualifies.
- Do they live with you? Your relative must live with you all year as a member of your household or be on the list of “relatives who do not live with you” in Publication 501. About 30 types of relatives are on this list.
- Do they make less than $5,050 in 2024 ($5,200 for 2025)? Your relative can't have a gross income of more than $5,050 in 2024 and be claimed by you as a dependent. This threshold increases to $5,200 for 2025. Certain income is excluded from this requirement such as all or part of Social Security benefits.
- Do you financially support them? You must provide more than half of your relative's total support for the year."
The message that you are receiving from TurboTax indicates that the entries that you have made for Sarah put her in the qualifying relative category.
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