Disability retirement pay you receive as a pension, annuity or similar allowance for a personal injury or sickness that resulted from active duty service is not included in taxable income. The same treatment covers VA disability compensation and pension payments to veterans or their families, grants for a home designed for wheelchair living, grants for a motor vehicle if you lost your sight or the use of a limb, and benefits under a dependent-care assistance program.
There is nothing to apply for. Leave these payments out of the income you report. See IRS Publication 525 for the federal treatment the exclusion follows.
Your VA award letter or retirement paperwork showing the payments and what they are for.
