Since your friend lives in NYC, she is required to file a NY state return and pay taxes to the state and NYC. As to AZ, it depends on how the company treats her. Take a look at her W-2 form, which state taxes were withheld? Does it say AZ or NY? If it says NY, the income might not be considered sourced in AZ, then she doesn't need to file an AZ state return. When in doubt, give the company payroll a call for clarification. If she is required to file an AZ state tax return and pay tax to AZ, she can claim a tax credit on her NY state return for taxes paid to AZ.
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