should my daughter file a separate tax retun if she is a college student?

She MUST file her own return if her income is more than the filing requirement. If it's less but tax was withheld from her wages, she MUST file her own return to have that refunded to her.

You never file a joint return with your child.

Maybe you are asking if you should claim her as a dependent?

While you claiming her is optional if she qualifies as a dependent, if you CAN claim her she loses her personal exemption and any refundable education credits even if you choose to not claim her.

The next question is, CAN you claim her?

If she's under 24 as of the end of 2016 and a full time student for any part of any 5 months in 2016, AND she lived in your home for more than half of 2016, including time away from home for school, AND she provided less than half of her OWN support, she is a dependent under the Qualifying Child rule. If any of those tests are not met, she may still be a dependent under the Qualifying Relative rule if her gross income for 2016 was less than $4,050 and you provided more than half of her total support for the year.

If you can claim her as a dependent, any education credits go on your return as those follow the exemption regardless of who paid the education costs.

See IRS Pub 501 https://www.irs.gov/pub/irs-pdf/p501.pdf for a full discussion on filing requirements and claiming dependents. Use the support worksheet therein to determine who provided how much of her support.

It's not either/or. If you meet the requirements, and parents of college students often do, you can claim her - that doesn't mean she can't also file and get back any refund she has coming She just has to answer yes to the question on her return that asks if she can be claimed as a dependent.

there is no such thing as better off, she has income she files her own tax return, she does not claim her personal exemption but she claims her standard deduction

and actually if she didn't make more than the standard deduction($6300) and had no income tax withheld she doesn't have to file at all

You cannot file her income on your return anyway. If she wants to file, she has to file her own return.

She has to file a separate return. You cannot include a child's income on your return once they're past the age of 14. It does not matter if you can claim her as a dependent. She simply checks the "dependent of another" box.

"All taxpayers who are claimed as a dependent on someone's tax return are subject to different IRS filing requirements, regardless of whether they are children or adults. Since a dependent is unable to claim their own exemption, a tax return is necessary when their earned income is more than the standard deduction for a single taxpayer, which in 2016 is $6,300. However, the threshold decreases to more than $1,050 when the dependent's income is unearned, such as from dividends and interest."

So it depends how much she earned. She can't claim an exemption for herself if you claim one, though.

You both file