Hopefully, this is helpful.
The statement on the screen Did you support yourself in 2021? reads:
Supporting yourself means paying for more than half of your living expenses with earned income.
Properly administered 529 distributions are not income of any kind. In cases where a portion of a 529 distribution is taxable income, the income is not earned income.
The IRS defines earned income as taxable income you earned as an employee, such as wages, salaries, commissions and tips.
The qualifications for the third stimulus payment are:
- you were a U.S. citizen or U.S. resident alien in 2021,
- you were not a dependent of another taxpayer’s 2020 tax return, and
- you have a Social Security number.
There are income limitations are if your adjusted gross income (AGI) is more than:
- $150,000 if married and filing a joint return or filing as a qualifying widow or widower
- $112,500 if filing as head of household or
- $75,000 if filing as a single or as married filing separately.
If your niece did not receive the third stimulus payment, she may qualify to receive that amount through a Recovery Rebate Credit found on line 30 of the 2021 Federal 1040 tax return.
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