Thanks MarilynG1. The W2 does include state taxes from OH, PA and SC that equal the amount in box 1, but the Desktop Turbo Tax software I use still doesn't allow me to efile. It makes sense that Turbo Tax would flag it as a mistake but there should be a way for me to override flag once I verify that the w2 is indeed correct. Once Turbotax forces me to go to the Post Office it pretty much loses its "Turboness."
Below is the response I received from the payroll company. I think the work around they suggest is similar to your advise but I would still love for Turbo Tax to allow me to override this so I could properly efile all my taxes. As the payroll company suggests in the end "It is highly recommended to get ahold of a Turbotax tax service representative as it is their software not accepting the current w2 for a multistate return." But it seems all efforts to contact a "service rep" leads me down a wormhole of them trying to sell me more services.
"This is a case of having withholding, on out of state wages and results in a situation where if your where your earned wages
were mostly in other state(s). This would result in box 16 wages being lower than the box 17 state withholding.
What happens, is that withholding is given first priority to the work-state.
Then if your resident state has a higher rate than the workstate on a given payroll period, the resident state takes the difference from the rates between the work-state and the resident state.
When it involves multiple states withholding, filling programs that were intended for single state use would flag that as an error (as it makes sense for that instance if you only had wages in one state but more withholding was taken than wages).
I believe the workaround on turbotax is to file the non-resident state returns and then finish by filing for your homestate. It is highly recommended to get ahold of a Turbotax tax service representative as it is their software not accepting the current w2 for a multistate return."
