The correct way to file would be Option A. If you lived and worked from home in Georgia, then all of your income is sourced in Georgia. You should file a Georgia resident return and a non-resident Virginia return for a refund of state income taxes paid to Virginia.
Per the State of Virginia, "income from Virginia sources" means income derived from labor performed, business conducted, or property held in Virginia. Since you telecommuted from Georgia, none of this income is taxable to the state of Virginia.
Therefore, when you are filing a nonresident Virginia return, please allocate $0 of your income to Virginia and you will get a full refund of taxes paid. As you stated, you will likely owe Georgia an underpayment penalty because you did not pay income tax to the state to which the income was sourced.
Please ensure your employer withholds the correct state withholding going forward.
For more information, please see Residency Status.
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