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Is freelance income earned by a U.S. citizen while living abroad subject to state income tax?
New York will want to you to pay taxes on income from "New York sources". I'm not sure what this means to a freelance web developer.  If your wife is doing freelance web development under the same business entity as she did in New York (ie. a New York sole proprietor, corporation, etc), you probably do need to file. From nonresident tax form manual: http://tax.ny.gov/pdf/2011/inc/it203i_2011.pdf If you were a nonresident of New York State, you are subject to New   York State tax on income you received from New York State sources in   2011. If you were a resident of New York State for only part of 2011, you are subject to New York State tax on all income you received while   you were a resident of the state and on income you received from New   York State sources while  you were a nonresident.  To compute the amount of tax due, use Form IT-203, Nonresident and   Part-Year Resident Income Tax Return. You will compute a base tax as   if you were a full-year  resident, then determine the percentage of   your income that is subject to New York State tax and the amount of   tax apportioned to New York State.