You may be eligible to claim both your niece and her son as dependents on your return. In order to claim someone as your dependent, the person must be:
- Either your qualifying child or qualifying relative
- A U.S. citizen, U.S. resident, U.S. national or a resident of Canada or Mexico
- Unmarried or, if married, not filing a joint return or only filing a joint return to claim a refund of income tax withheld or estimated tax paid.
Additionally, you must meet the dependent taxpayer test. If you can be claimed as a dependent by another person, you can't claim anyone else as a dependent.
The requirements for a qualifying child and a qualifying relative, as well as additional information regarding these tests, can be found in Publication 501, Dependents, Standard Deduction and Filing Information.