.....what might be the easiest option..?
See if she can get the NE employer to stop withholding IA taxes.
Then increase your own IA withholding a bit (At what I presume is an IA employer)
Why are they doing the IA withholding at all?...perhaps because the IA marginal tax rate is higher than NE's for a couple's combined income above ~49,000, and some extra IA withholding would help out with that.
..or...is she telecommuting part-time from home in IA?
______________
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*