Tricky. You receive money when you constructively receive it (that is, you recieve the money when you receive the check even if you cash it later). But I think it's a good argument that if the bank account was empty and the check was NSF, then you never constructively received it.
Is she a W-2 employee or independent contractor.
If independent contractor, I would argue that this should not be reported as income. If the employer issues a 1099-MISC that includes the amount, you can report the full amount of the 1099-MISC as income and then report the NSF check as a business expense.
If she is a W-2 employee, you will need to wait and see if you get a W-2 from this employer. If you don't get a W-2 or the W-2 is incorrect, there is a procedure to file a "substitute W-2" form to add your correct figures. But you will need to wait at least until Feb 15 to file (W-2s must be mailed by January 31.) Ideally you would try to get a corrected W-2 from the employer first.
You can also get your state labor department involved, they will have leverage against the employer and may even have a fund to pay off bad payroll checks, in which case this becomes income again.
