you need to report it, or you are going to get hit with fraud.
your kid isnt a kid. shes an adult. while under 18 her money didn't effect your housing, but now shes a legal adult In the household.
Section 8 will know. they will find out. your kid is currently paying Social Security, State, and federal taxes out of their checks, cashed or not. stop withholding her money and let her cash her checks. she can use that money to start getting out on her own
they are likewise using your address as their home address.
if you dont report it, youre going to be dinged for fraud and kicked off section 8 for up to 5 years.