Why is your child having tax withheld? That can be changed with Social Security. But in order to receive a refund, yes, she will need to file a tax return and enter her SSA1099.
It is unusual that tax was being withheld from her SS benefits---who set that up and requested that?
No, it does not mean that you cannot claim her as a dependent. She can file a tax return to seek a refund, but on her own return, she MUST say in MY INFO that she can be claimed as someone else's dependent.
If you get the tax withholding issue sorted out, she will not need to file a tax return again until she has some additional income from an after school job, etc. someday. And her SSA1099 does NOT get entered on your return.
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**