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You cannot claim the child care credit for payments to your daughter if you can claim her as a dependent. It doesn't matter whether you actually do claim her. What matters is whether you can claim her. Go to the following link on the IRS web site to determine whether you can claim your daughter as a dependent. If she's still in college and living in your home you probably can claim her.
Whom May I Claim as a Dependent?
Also note that you can only claim credit for child care expenses for children under 13. Expenses for the older child are no longer eligible for the credit starting the day the child turns 13, even in the middle of the year. If you are paying for care for both children, you will have to figure out how much of the cost to allocate to each child.
Q. Can the baby sitting money I give her for college be considered as tax credits?
That's really two questions:
Q1. Can I claim the dependent care credit.
A1. Only if she does not qualify as your dependent.
Q2. Can I claim the Education (tuition) credit?
A2. Only if you are claiming her as a dependent. It doesn't matter who paid her tuition, the tuition credit goes with the student's dependency. Although the general rule, in taxes, is that you must be the one making the payment, to get the deduction or credit, there is an exception for education.
There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. It is usually best if the parent claims that credit.
You cannot claim the (up to) $1000 refundable credit if you are, or can be, claimed as a dependent by someone else.
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