This is taxable income to her, and she will need to file a tax return and claim this income on her own return.
You can claim her as a dependent under the normal dependent rules. If she is under 18, or between 19 and 24 years old and a college student, you will most likely be able to claim her as a dependent as long as she did not pay for more than half of her own support. If she was over 18 and not a full-time student, or over the age of 23, you would not be able to claim her because the income from the K-1 is too high.
See further on qualifying
child dependent rules below:
Qualifying Child Dependent:
- She is under the age
of 19, or she is between the ages of 19 and 24, and;
- She was a full time
student for 2016
- To be a student,
they must be, during some part of each of any 5 calendar months
of the year:
- A full-time
student at a school that has a regular teaching staff, course of study,
and a regularly enrolled student body at the school, or
- A student taking a
full-time, on-farm training course given by a school described in (1),
or by a state, county, or local government agency.
- The 5 calendar
months don't have to be consecutive.
- She did not provide
more than half of her own support.
- This
test is different from the support test to be a qualifying relative,
which is described later. However, to see what is or isn't support,
see Support Test (To Be
a Qualifying Relative) , later. If you aren't sure whether a
child provided more than half of his or her own support, you may
find Worksheet 2 helpful.
- She did not file a
joint tax return.
- An exception to the
joint return test applies if your child and his or her spouse file a
joint return only to claim a refund of income tax withheld or estimated
tax paid.
