Technically, yes you are correct. This information will not affect either your Federal return or your KY State return in TurboTax. That doesn't mean that there is nothing to correct, but just that it won't hold up these two returns (even if you itemize).
Fixing this will take work outside of TurboTax. It seems that the employer withheld to the wrong tax district. Even though they may be located in Nicholasville, your wife does not pay Nicholasville taxes unless she is physically working in Nicholasville. She would pay Lexington/Fayette taxes for working inside of that district, however.
See if your wife can find out the exact amount of income she actually earned in Nicholasville, and file a Request for Refund Form (pdf link for the document) with Nicholasville to have mistaken withholdings refunded. Then, she files that same income to Fayette County using Form 228 – 2018 net profit license fee return (Lexington does not have an entry line for wages earned in Lexington that did not have Fayette Taxes withheld. You may need to contact Lexington Revenue at (859) 280-8300 to get additional instruction. But Form 228 is what is used to report income to be t...
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
