Your federal return should only include your resident state income taxes. So that would be DC state income taxes only.
DC and
VA have what is called a state reciprocal agreement. This allows nonresidents
to not have state withholding taxes taken out for wages earned in
the state.
In
order to get the full refund of your VA withholdings, you will need to file a
nonresident VA return but report zero "0" income from VA (even though
you do have VA wage income). You need to file your VA return this way because
DC does not allow a credit for tax paid to a reciprocal state on wages,
salaries and commissions. If tax was withheld by a reciprocal state (VA), you
must file directly with the state for a refund of those taxes. You may need to mail in
this return and include your state W-2 information. You will want to include an
explanatory statement with your VA return stating your situation (that your DC
employer withheld VA taxes from your wages in error)
You
will need to claim the full amount of your VA wages on your DC resident state tax
return.
To
avoid this issue in the future, you need to file an exemption form with your DC
employer. Workers exempt under a reciprocal agreement must complete Form VA-4, Personal Exemption Worksheet, which must be kept on file by the employer.
