VA Disability compensation is not part of your military retired pay, so it is not reported on your DFAS Form 1099-R and is not reported anywhere on your tax return. Since the VA compensation never shows up on your tax return, it doesn't need to be taken off your tax return.
Since VA Disability compensation is not taxable, you just get a direct deposit every month - no tax documents are issued, just an annual VA Award Letter every December (or January).
