After you enter the W-2 continue through the questions. After a few screens you will come to the screen that says "Let's check for other situations" (not uncommon situations).
However, Form 4852 is only for correcting certain federal information on the W-2. It cannot be used to correct the state or local information. The local tax might be correct. Depending on the state and locality, your wife might have to pay tax to the locality that she worked in, even though she doesn't live there. So your first step should be to ask the employer to explain why the local tax was withheld. If it turns out that the local tax is not correct, the best solution would be for the employer to issue a corrected W-2.
