The renting out of rooms has changed much in the last few years. The room she rents from you has zero personal use to you. The rest of your home, is your home that you are letting her use.
Traditionally, you based everything on that one room that was not available to you. The landscape and laws are evolving.
@Carl and I are both wary of what these changes will look like after some court cases.
You are claiming her as a dependent? Saying you provide over half of her support? Please review what is considered support and be sure you can prove that. Please use Worksheet for Determining Support. Particularly since she is paying you rent. Use this online tool to be sure you can claim your niece after the worksheet, Filing Status, Dependents and Exemptions
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