It appears that this may have something to do with TurboTax pre-emptively expecting a rejection error from the state of CA. Since your withholding is not attached to your wife's SSN and is now more than was actually reported on her W-2, it can trigger a manual review requirement. So when the state matches what they received on the person who is getting the "extra withholdings" from their spouse, it is saying it is too much so it needs reviewed. Having less is not as much of a flag as having more than was reported.
So since she is the one receiving the extra withholding, it does look like you will need to print and mail her state return.
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