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The reason that TurboTax asks for your school district tax code is because some school districts (localities) are taxed. Depending on what school district you live in, your tax may change accordingly.
Because the state taxing agency said so.
What they do with it depends on the state. In Ohio, it's only used to distribute revenue to the school districts (SD). Unfortunately, TurboTax (TT) will not prepare an OH SD income tax (SDIT) return, based on that input. You have to know whether your SD is a taxing district, and initiate the return, in TT
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