If she qualifies under the MSRRA, she will not
need to file a MN state income tax return (except to get a refund of any NM
withholdings.)
You will need to check the NM Department of Revenue Website to see how to request that DE income tax not be withheld
from your wages. Since you are a resident in FL, you will not need to have any
state withholdings take out of your NM income.
If she did end up with NM withholding on your
W-2, you will have to file a NM nonresident state income tax return to get
these withholdings back.
In
order to get the full refund of her NM state income tax withholdings, she will
need to file a nonresident NM return but report zero "0" income from
NM (even though she did have NM wage income). She must mail in this NM
nonresident state income tax return and include her state W-2 information. She
will want to include an explanatory statement with her NM return stating her
situation (that her NM employer withheld NM state income taxes from her wages
in error because she is a military spouse and covered under MSRRA).
