You are correct in that if you claim her as a dependent, her income will be included in household income for you. She is your qualifying child for EIC if she meets the qualifications below. However, you stated that she lives away year round. She is your qualifying child for dependency if she lives with you, except for temporary absences. She would have had to live with you more than 6 months for EIC.
What is a qualifying child for the Earned Income Credit (EIC) in 2019?
- Be your child (including legally adopted), stepchild, eligible foster child, sibling, half-sibling, step-sibling, or a descendant of any of them (for example, your grandchild or niece); and
- Be permanently and totally disabled or under the age of 19 as of December 31, 2019 (under 24 if a full-time student) and younger than you (or your spouse, if filing jointly); and
- Have lived with you (or your spouse, if filing jointly) for more than half the year in the United States (unless you were in the military); and
- Not file jointly with their spouse unless they weren't required to file but did so anyway to claim a tax refund.
