rjs is correct. You cannot resolve this situation in TurboTax. Did your employer actually withhold the tax that is reported on your wife's W-2? If so, you will have to get the employer to correct that. If there wasn't any local tax withheld from your wife's pay you could try not reporting the local tax information when you input your W-2 and see what happens, but I don't recommend that. I do recommend you get the employer to correct the W-2 and reimburse any tax withheld, if any.
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