The net result should be a large refund from Alabama and a large tax due to Georgia. The most important thing is to only allocate the income he earned in Alabama on the nonresident Alabama return, in spite of what the W-2 says. Georgia, as his resident state, taxes all the income he earned during the year. He should be getting a credit on his Georgia return for the taxes he paid to Alabama, so it sounds like you are doing everything correctly now.
There is a federal itemized deduction for state income taxes paid during 2021. Even if he gets a refund from Alabama for what he paid to them, he still paid those taxes in 2021. The federal itemized deduction should not be impacted by this. If he does itemize this year, his refund from Alabama will have to be entered on next year's tax return and may be taxable.
