State tax filing

No.   A dependent is not permitted to claim a dependent of their own.   At age 17, your daughter can still be claimed as a qualified child dependent.   

 If your 17 year old has a child is being supported by you, then you can claim her and her child as dependents on your own tax return.   The person who is claiming the baby is the one who gets the child tax credit.    You will not get CTC for claiming the 17 year old --- she is too old--- but you get the $500 credit for other dependents for her.  Depending on your circumstances, you may also be able to file as Head of Household and get earned income credit or childcare credit if you paid someone to take care of the baby while you worked.

IRS interview to help determine who can be claimed:

https://www.irs.gov/help/ita/who-can-i-claim-as-a-dependent

https://ttlc.intuit.com/questions/3113432-who-can-i-claim-as-my-dependent  

WHO CAN I CLAIM AS A DEPENDENT?

You can claim a child, relative, friend, or fiancé (etc.) as a dependent on your 2023 taxes as long as they meet the following requirements:

Qualifying child

• They're related to you.
• They aren't claimed as a dependent by someone else.
• They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
• They aren’t filing a joint return with their spouse.
• They're under the age of 19 (or 24 for full-time students).
• No age limit for permanently and totally disabled children.
• They lived with you for more than half the year (exceptions apply).
• They didn't provide more than half of their own support for the year.

Qualifying relative

• They don't have to be related to you (despite the name).
• They aren't claimed as a dependent by someone else.
• They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
• They aren’t filing a joint return with their spouse.
• They lived with you the entire year (exceptions apply).
• They made less than $4,700 in 2023.
• You provided more than half of their financial support.

When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them. There may be other tax benefits you can get when you claim a dependent.

To claim a grandchild as your dependent

When you enter the child’s name in My Info, you will be asked “What’s your relationship to  [child’s name]?”  

           Choose “another person”

            a drop down menu will appear that lets you choose grandchild

And....to be clear----all of the child-related credits are based on having income from working.   Without income on a W-2 or self-employment income, you do not get child-related credits.

And....since your daughter CAN be claimed as a dependent, if she filed and said she cannot be claimed --- she needs to amend her tax return.   And re-pay any credit given to her by the IRS or state.   If she filed first it has blocked the parent who can claim her from being able to e-file this year, so that parent will need to file by mail.  Waiting for the amended return to be processed will do no good; the correct return can be filed by mail at any time.