My daughter's financial aid info is on my paperwork even after TurboTax informed me that she needs to file on her own. What do I do? I thought unneeded info erased.

[Hal_Al]

Be sure you understand what "file on her own" means. TurboTax is most likely telling you that she has enough income (probably scholarship income) to have to file a tax return. That does not necessarily mean she cannot be claimed as your dependent. A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if: 1. 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 2. He did not provide more than 1/2 his own support. Scholarships are considered third party support and not as support provided by the student. 3. He lived with the parent (including temporary absences such as away at school) for more than half the year  Furthermore, there is a rule that says IF somebody else CAN claim him as a dependent, he is not allowed to claim his own exemption. If he has sufficient income (usually more than $6300), he can & should still file taxes; he just doesn’t get his own $4050 exemption (deduction). In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.  

[jessicahernandez]

I understand I can claim her and she needs to file her own taxes for financial aid. But after TurboTax informed me that she needs to file her financial aid, the info still stayed on my tax paperwork. Do I erase her financial aid info from my taxes? I'm just confused because I thought TurboTax erased any unusable info.

[Hal_Al]

It's complicated. The simple answer is: Yes, delete her educational info from your return, since you know her scholarships exceed her qualified expenses (tuition, fees and course materials). But don't lump loans in with scholarships and grants. They may all be "financial aid", but they are treated differently for tax purposes.

There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 2. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.