@Acusimano --
Prior to October 1, 2021, due to Covid NJ was "sourcing" income based on the employer's jurisdiction. Starting on October 1, NJ resumed sourcing according to where the service or employment was performed - which was NJ's pre-Covid rule. See "End of Temporary Suspension of Employer Withholding Rules for Teleworking Employees" in this reference:
https://www.state.nj.us/treasury/taxation/covid19-payroll.shtml
So the portion of your wife's remote income that she earned on or after October 1, 2021, would not be taxable by NJ.
To claim a refund of the excess withholding, she would have to file a non-resident NJ return, allocating to NJ only the income earned prior to October 1.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
