W2 for GA and VA but lived and WFH in GA

[mytax26]

I have two W2s with state taxes paid for GA and VA, but I worked from home in GA. 

Should I 

a) File for both VA and GA. Get a full refund from VA and pay the additional taxes to GA.

b) File for both VA and GA separately and show whatever shows in W2s? 

Do I even have option "b" or am I stuck with the option "a"?  With the option "a", Turbotax shows me a penalty to pay to GA.

[LenaH · Accepted solution]

The correct way to file would be Option A. If you lived and worked from home in Georgia, then all of your income is sourced in Georgia. You should file a Georgia resident return and a non-resident Virginia return for a refund of state income taxes paid to Virginia. 

Per the State of Virginia, "income from Virginia sources" means income derived from labor performed, business conducted, or property held in Virginia. Since you telecommuted from Georgia, none of this income is taxable to the state of Virginia. 

Therefore, when you are filing a nonresident Virginia return, please allocate $0 of your income to Virginia and you will get a full refund of taxes paid. As you stated, you will likely owe Georgia an underpayment penalty because you did not pay income tax to the state to which the income was sourced. 

Please ensure your employer withholds the correct state withholding going forward. 

For more information, please see Residency Status. 

[mytax26]

Thanks for suggesting the correct way.

Turbo Tax filled my VA non-resident return (763-S) to be sent by mail (since eFiling is not allowed for 763-S). When I send 763-S, do I need to attach all the W2s or just the W2 which shows VA taxes?

What else do I need to attach? My GA tax return or Federal return?

Thanks. 

[ErnieS0]

You only need W-2s and 1099s with Virginia withholding.

Virginia says: "Be sure to include Forms W-2, W-2G, 1099 and VK-1 that indicate the same amount of Virginia income tax withheld as the amount you claim on your return. Enclose these with your return. When enclosing Form VK-1, fold in half and enclose in front of return."