Hi, We live in NJ and work in NY. My wife works from home NJ for a employer outside NJ. I am doing NJ taxes in turbtax, it is only populating my NY income as NJ taxable.

If you paid taxes on your New York income, file a NY Non-Resident return and report only NY Income and NY taxes.

Prepare your Non-Resident returns first, then your Resident State.  

Does your wife receive a W-2 or a 1099-Misc?  If a W-2, it should flow through to your NJ return. She may need to file a separate non-resident state return if taxes were withheld from a state other than NJ. 

If she receives a 1099-Misc, this would be Self Employment Income, reported on Schedule C in your Federal Return.

 For NJ, report the net income from the operation of her business in the "Net Profits From Business" section of the NJ-BUS-1, Business Income Summary Schedule.  Reference Schedule C from your Federal Return for that amount.

TurboTax should guide you in that, and may have already done the calculations for you on the NJ-Bus-1.  Click this link for more info from the NJ Division of Taxation. 

It can be confusing filing multiple states.  Click this link for more info on filing multiple states.