Yours is not an entirely uncommon situation. First of all, if you have not already contacted your employer's payroll office or human resources department, you'll need to do that, in order to have them stop withholding Oregon income taxes from your paychecks on a forward-looking basis.
Second, in order to claim your Oregon tax (withheld in error, or by mistake) back, you'll need to fill out an Oregon Form 40N nonresident income tax return. On that tax return, and in TurboTax, you'll indicate that absolutely zero (none) of your income is Oregon-source; but you will also need to input your Oregon state tax withheld. You can accomplish that by indicating in the W-2 data entry section, on the federal side of the program, Boxes 15 through 17, that your Oregon wages are $0, and your Oregon withholding is $YYY dollars.
Simultaneously, you will want to make sure that the program knows you are a full-year Arizona resident. You should tell the program also that you "made money" in another state (Oregon) even though that is not technically true. The reason for doing this, though, is so that the software will generate an Oregon Form 40N and add it to your tax return . . . which is what you need to file to reclaim your Oregon state income tax withholding. Please see the screen-capture images below as an example (simply click to open).
If you've already started your state tax returns, and don't have the right tax forms (Arizona full-year and Oregon nonresident), then you may want to simply delete those state returns and start over -- which you can do without losing any of your federal data.
Beyond this advice, it is not possible to completely and accurately diagnose your tax return, without seeing the data inputs that have already been made. But we absolutely assure you that you should not owe additional taxes to Oregon, given your set of circumstances.
We therefore respectfully offer that if you have additional questions, encounter any difficulties with making the needed corrections, of if you just want to speak with a live tax expert (who can share your computer screen with you), you are welcome to contact us. We
would be happy to help; and as a paying customer, the call is free to
you. Here is a link where you can create a support ticket and reach us:
https://support.turbotax.intuit.com/contact/
Thank you for asking this question.
