Our daughter is a dependent and attends college and works in another state. Which state should she file her tax returns in?

Your daughter is still a resident of Hawaii even though she is in college in AZ.  She may have to file a non-resident AZ tax return in she has withholding from AZ.

Have your daughter review these resources:

Review your personal information that you've entered in TurboTax, which is needed to help ensure that you create the correct state tax returns.

Review your answers on the Personal profile screen. 

1. Select your name under My Info
2. Select Revisit
3. Scroll through the screens to ensure that you have the correct answers for your state of residence
4. Scroll down to Other State Income and select Edit
5. Check your answer for Did you make money in any other states? Answer Yes, and indicate that you made money in another state.

After you complete your federal tax return and you move to the State Taxes sections, both your non-resident state and resident state returns will be listed.  Prepare your non-resident  tax return first. Depending upon the state you live in, you may get a credit on your resident tax return if you paid taxes on you non-resident return.

For additional information, refer to the TurboTax Help articles Do I have to file tax returns in more than one state?,  Why would I have to file a nonresident state return? and How do I file a nonresident state return?