If you were awarded a 60% disability rating by the VA, you should be receiving monthly benefit checks (or Direct Deposits) from the VA. Those payments are not taxable and are not reported to either you or the IRS.
If you are also eligible for and receiving military retirement pay, it is taxable income and will be reported to you and the IRS on a Form 1099-R.
Your DFAS W-2 is just a W-2, taxable and reportable on your return.
