It's complicated, but you most likely can claim her.
First, you need to understand that there
are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying
Relative" in IRS parlance even though they don't have to actually be
related). There is no income limit for a QC but there is an age limit, a relationship test and a residence test. Only a QC
qualifies the taxpayer for the Earned Income Credit.
A child closely related to a taxpayer can be a “Qualifying Child (QC)”
dependent, regardless of the
child's income, if:
1.
He/she is under age 19, or under 24 if a full time
student for at least 5 months of the year (including high school), or
is totally & permanently disabled
2.
He did not provide more than 1/2 his own
support for the whole year
3.
He lived with the relative (including temporary
absences) for more than half the year. Military basic training is considered a temporary absence. This is academic in your case, since she meets the half year requirement anyway.
A person can still be a Qualifying
relative dependent, if not a Qualifying Child, if he meets the 6 tests for
claiming a dependent:
1. Closely Related OR live
with the taxpayer ALL year
2. His/her gross taxable income for the year must be less than $4,000 (2015). This income test does not apply to a QC.
3. The taxpayer must have
provided more than 1/2 his support. Note how the support test is different for a QC
In either case:
4. He must be a US citizen or resident of the US, Canada
or Mexico
5. He must not file a joint
return with his spouse or be claiming a dependent of his own
6. He must not be the
qualifying child of another taxpayer
