If she is your dependent, then her income counts for "household income".
As a clarifier here (mainly for others reading this) if you qualify to claim the student as your dependent, the student has *NO* *CHOICE* must select the option for "I can be claimed on someone else's return" when/if the student files their own tax return. It does not matter if the parents actually claim the student or not.
The parents *DO* have a choice, and do not have to claim the student is they don't want to. However, if they do not claim the student, then the parents can not take *ANY* of the education credits for that student either. That means the student will claim all the education stuff on their own return, no matter what.
But it does not change the fact that the student is still required to indicate they can be claimed on someone else's tax return. That means the student will NOT qualify for anywhere near the education tax breaks that the parents would, if the parents claimed the student.
