You're mixing up the five months as a student requirement vs. the 7 months (more than half the year) she is required to live with you. They are two different rules and BOTH must be met for her to be your dependent.
There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.
A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:
- He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
- He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
- He lived with the parent (including temporary absences such as away at school) for more than half the year
In one place, in TT, you check that she was a fulltime student (nothing about 5 months is mentioned). In another place you say how long she lived with you (you must select 7 months or more). You count the time away at school as living with you.
