Will a letter from the VA confirming over $4000 in monthly disability income meet the income requirement for a one-year visa extension in Thailand?

no

We have plenty of VFWs and American Legions in Thailand. Contact the one closest to your Thai residence/destination.

Short answer is no.. Long answer is no with more complications. You will need to transfer 65k baht each month from said VA disability payments, but simply showing them the payments from the VA to your US account does not qualify.

For the income method, the immigration I use wants to see bank transfer and the source of the funds. I use a VA letter for the proof of source.

When did you get a letter from the embassy? That ended years ago.

The US Embassy in Thailand has never verified income. They would provide an affidavit that certifies that you swear under penalty of perjury that what you say for your income is true and correct. Thai Immigration decided that wasn’t good enough because your bank statement wasn’t certified by the government so then they started requiring a Thai bank account with a deposit of a minimum ฿800,000. After the first extension of stay is granted, if you have monthly deposits around the same time of the month into your account for a year to satisfy the requirements and have the bank statement and letter, then you can try to apply for your new permission to stay with the required monthly deposits for the second year. Funny, your bank account statement is good enough for the Thai Embassy but not the Royal Thai Immigration Department. Welcome to dealing with the Thai government.

Uk doesn't stamp either for monthly income, maybe use an agent, but checks are getting more often and tighter

I thought VA disability was more a compensation than income hence why it's tax free in the US? A military pension would be considered income

Us hasn't done this in a very long time

For the first one year extension based on retirement, the ONLY thing you can use is proof of 800,000 baht in your Thai bank account, or embassy certified income. A VA letter will never be accepted by any immigration office. Anyone can make one of those.

During the firs year that you obtained using 800,000 baht in the bank, you can do an international transfer into your Thai bank account of at least 65,000 baht every single month. Then for your 2nd extension you can show them you kept the required money in your bank account from last year's extension, and you also have 12 months of international transfers into your bank account. This should let you switch to the income method, and you can then withdraw the funds from your bank account and continue the monthly transfers for as long as you remain in Thailand.