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If you follow the instructions below it will get you the right country and allow you to efile.
1. Federal taxes /
2. Wages & Income-Wages and Salaries - Start /Revisit
3. On screen, Here's your W-2 info, since you have already entered the W-2 and need to adjust the employer's address, select Edit under the employer's name
4. Select Foreign Address under Address Type and Canada under Country.
I'm also having this problem!I have it listed as a foreign address with the correct info. It accepts it correctly for my federal, but my state still wants a state abbreviation and zip code.
@kmichelle43 If you didn't pay any State Tax on your foreign W-2, then leave Boxes 15-20 blank in TurboTax when you enter your W-2 in your Federal return.
You didn't mention your state, but if this does resolve the error, all your income is taxable in your Resident State, so you could enter your two-letter state abbreviation (AZ for Arizona, for example) and your zip code.
Click this link for more info on How to Manually Enter a W-2.
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