Q. Can she file as an independent and take the Lifetime Learning credit (LLC) if I paid part of the tuition (I received 1099-Q)?
A. Yes. She can claim the LLC regardless of whether she qualifies as your dependent or not (she doesn't have to claim "independent" to do so).
If the student-dependent actually has a tax liability, there is a provision to allow him/her to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that he can be claimed as a dependent, on his return.
She can claim the credit, even if it was you that paid the tuition. It takes $10,000 of tuition to get the maximum $2000 LLC.
You mentioned a 1099-Q. Any expenses you plan to claim to keep the 1099-Q tax free must be reduced by the amount she claims for the LLC.
