OK...nutshell...assuming it is all as W-2 income
1) As a resident of CO, CO will calculate a tax on ALL your income from everywhere...even if WA doesn't tax it.
2) To avoid double taxation, CO will then allow a tax credit for any taxes you had to pay to another state (like Oregon)....but will only allow a credit "up-to" what CO would have taxed the same $$. SO you get taxed by CO on any WA income, and get at least a partial credit for any taxes you had to pay to OR.
3) The company "Should" only withhold OR taxes for the time you physically are working in Oregon...and at no other time. Doesn't mean they won't foul up...depends on how good their payroll department is.
4) IF...if they can withhold CO taxes for the time you are physically working outside of OR...great...but if they are not registered with CO to do that, they may not be able to do so, and you may need to set up CO estimated tax payments yourself for some of your income to get it prepaid and avoid any CO tax penalties.
5) at tax time, you must fully full in federal income tax forms first, then the non-resident state (Oregon) to calcualte the appropriate OR nonresident tax.......and CO tax return last.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
