I work at an AL office, but its temporary. I'm still a resident of VA. What state do I file with? Last year my company paid VA taxes, an now there seems to be some problem? What can I do, not to get screwed?

If I read the state abbreviations correctly, you work in Alabama, but live in Virginia.

That's one hell of a commute!

Generally, you pay taxes to the state where you WORK, and that state's tax MUST be withheld. You will file a state tax return in the working state and pay taxes on income earned while you worked in that state.

You will also file a state tax return in the state where you live. You pay taxes to that state on ALL world-wide income earned by you (and by your spouse if you are filing jointly).

Now, to avoid double taxation, the state where you live will give you a credit for the taxes paid to the state where you worked. You normally have to provide a copy of the Work state tax return as proof that you paid taxes to another state.

Leo, it sounds like your employer is currently withholding VA income tax from your pay check, and NOT withholding AL tax - is that right? If so, you are going to find that you'll have to write a big check to AL when you file your return, and you will get a big refund from VA. If this is the case, you should strive to file your VA return ASAP, so you get your refund quickly and can then use it to fund your AL tax payment, before April 15. And going forward - ask your employer to stop taking out VA tax and start taking out AL tax instead.

Good point, ebaines!

Yes ebaines, that is the case with my withholdings.
ATlantaTaxExpert, I really don't spend time at home in VA. This company has me traveling almost all the time. I mean, I spend more time living out of a hotel room, than at home. It's gotten so bad that I have got vehicles on both locations just to avoid having to constantly be flying. So are there any special forms that I need to fill out when I do my taxes in VA and AL?

No, you just need to make sure that you get the credit for taxes paid to Alabama on your Virginia return to avoid double taxation.