State taxes

No, the 763-S does not apply to you because the commuter state exemption only applies to residents of DC and Kentucky. It makes sense that Virginia taxes were withheld.

Virginia will tax the work performed in the state. You will file a non-resident return for the work performed in Virginia, then you will take a credit for taxes paid to other states on your North Carolina return.  

Here's how to claim the credit for taxes paid to other states: 

1. First prepare the non-resident VA return (don't skip this step or the credit might not populate correctly)

2. Next, prepare the resident NC return.

3. TurboTax will compute the credit for taxes paid in other states.

Here is a TurboTax article you may find helpful: How do I file a nonresident state return?