My daughter, a college student, did a 3 month internship in Michigan. She was paid. For federal, do I list that she lived in another state? Do I still file PA state?

[MichaelMc]

The IRS will not care where your daughter earned the money; if she exceeds the filing threshold, she will need to file a tax return.

If your child is being claimed as a dependent, she must file a return if any of the following apply.

1. Her unearned income was more than $1,050.
2. Her earned income was more than $6,300.
3. Her gross income was more than the larger of—
1. $1,050, or
2. Her earned income (up to $5,950) plus $350.

Finally, if your child has earnings from self-employment of $400 or more, she must file a tax return and pay self-employment tax (the employer's and employee's share of Social Security and Medicare taxes) on that income.

With respect to state income tax returns, again, if she exceeds the states' filing thresholds, Michigan will tax the income because it was earned within the state, and Pennsylvania will tax it as her state of residence. However, most states allow a tax credit to offset the taxes paid to another state. TurboTax will guide you through the steps. 

Before buying an extra state module in TurboTax, please check with the Michigan Department of Treasury http://www.michigan.gov/taxes/0,4676,7-238-75545_43715---,00.html to verify if your daughter has a filing requirement.