The big question for your wife is, is she still a Utah employee? If she has given up her desk in the "home office" and is permanently working from home, and considered a visitor if she comes back to the office, then she is not. In that case, the employer should be withholding Oregon taxes rather than Utah. If they continue to withhold Utah taxes, all is not lost: You will file a Utah non-resident return to get a refund of the withholding, and an Oregon resident return on which you will owe. Of course, the refund usually takes longer to arrive than the debit for the amount owed, but in the end, it all works out.
Should she become a contractor, that's a whole different story. In that case, she will be responsible for paying quarterly estimated taxes to cover her self-employment tax and income tax, because contractors have no withholding.
Nick K, EA
