To fix the difference for the untaxable amount as per the Strickland Decision:

In the State section you will enter a correction under "Enter your Total Other Exclusions."

Here is an example of what that entry would look like:

I had a similar problem a few years ago I just filed an amended return and attached a spread sheet showing my calculations and explanation (ie a copy of the CRSC determination) to get a tax refund.  It appeared the IRS is aware of the CRSC and the 1099-Rs from DFAS.  If you look at the amended return it is rather easy to file 

Correct.  If a return is not yet filed but you want to to fix the difference for the untaxable amount as per the Strickland Decision:

In the State section you will enter a correction under "Enter your Total Other Exclusions."

Here is an example of what that entry would look like:

@lshaffer

How do you correct the taxable income to reflect the CRSC reduction for a Federal return?

You have to enter the Combat-Related Special Compensation amount as a negative under Other Reportable Income.  Enter Combat-Related Special Compensation as the description.  Keep copies of the documentation with your tax records in case the IRS requests it.  

Federal Taxes -> Wages & Income -> I'll choose what I work on -> scroll to the bottom and under Less Common Income select Start (or Update) for Miscellaneous Income.... You'll find all sorts of other income categories in there. If none of those shown fit the bill then pick Other reportable income and you can enter your own description(s) and amount(s).

@m7waldron