@Chiltonw
if your wife is a non-resident of Oregon, she must file an Oregon non-resident tax return, and she will pay income tax on all of her Oregon-source income. For a W-2 worker, Oregon source income is income that is paid to her while she is living or working in Oregon. It would not include bank interest, investment income, gambling prizes, or other income because that is allocated to her home state. But that means that if she works full-time in the state of Oregon and does not work from home, then all of her job income will be considered Oregon income.
I believe that you may file a federal joint tax return, indicate that you live in the state of Washington. TurboTax will ask if either you or your spouse earned income in another state, and you will indicate Oregon. Then, you will be required to manually tell TurboTax how much income is allocated to Oregon, and how much is allocated to Washington. You would allocate 100% of your spouses working come to Oregon, but your income, and other family income, that is not considered Oregon source of income would be allocated to Washington.
