In the Sales Tax Deduction section, it asks me for nontaxable income amounts. Is the Third Economic Payment received in 2020 considered nontaxable income for purposes of the sales tax deduction calculations like VA disability payments are?
No. It is not income for that purpose. Income that is nontaxable may have to be shown on your tax return but isn’t taxable. The EIP is not shown on the return. The only reason it is entered is to determine if the IRS needs to send you a payment you have not received.
No, the Third Economic Impact Payment is not included in your gross income. Therefore, you will not include the third payment in your taxable income on your 2021 Federal income tax return or pay income tax on the third payment. It will not reduce your refund or increase the amount you owe when you file your 2021 Federal income tax return in 2022.
A 2021 payment also will not affect your income for purposes of determining eligibility for federal government assistance or benefit programs.