New Employer sent $3000 to a state I didn’t live in. TurboTax is showing I have a tax due of $1785 in my home state. When I go to file it now shows I owe $123 (penalty) not the $1785 and will only get back $425 from the state I did not reside in. This doesn’t seem correct.
That does not seem correct. If your employer sent taxes to a state you didn’t live in, you should ignore what is on the W-2 and report $0 income. Your refund should equal the state withholding in W-2 Box 17.
States have different procedures in handling this situation. In general, it’s best to file by mail and include an explanation (and letter from your employer if you can get one) explaining what happened and why you are not claiming any income.
Send your return by certified mail with proof of delivery.
You will owe a lot of your home state, plus possible penalty. The penalty amount only may be showing up instead of the amount due if you clicked on the screen to amend your state return and said you paid the $1,785. If so, go back to amend and cancel it.