Q. Do I have to claim her as a dependent because we support her?
A. No. But, if she qualifies as your dependent, she has to check the box on her form 1040 that says she can be claimed as a dependent. But support alone does not establish dependency*.
"It does not benefit our tax situation to do so." That would be unusual . You get the $500 Other dependent credit and probably the (up to) $2500 tuition credit.
Q. And if I do claim her as a dependent, can she then File as a Virginia part your resident and then in New York as apart year resident?
A. Yes, if everything she has done establishes VA residency. That depends mostly on her living situation and what "stayed in Virginia for pretty much all of the past year" means. For the qualifying child dependency test, students "away at college" are usually considered as still residing with their parents, even if living off campus.
*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
If she does not meet the QC tests, her income must be less than $5050 for her to be a qualifying relative dependent, no matter how much support you provided.
See full dependent rules at: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...
