You would need to pay the additional tax on the unemployment you received.
Since the tax was only withheld on your wages, you now owe that portion of income attributed to unemployment.
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I understand the part about owing on unemployment, what I don't understand is why does it show I owe $774.00 when I paid the majority of that through my regular job where taxes are withheld?
To check your W-2 to see if School District Tax was withheld through your regular job:
Box 18 (local Wages)
Box 19 (local income tax) - is it zero?
Box 20 (locality name)
Normally, city and school taxes are withheld from your W2 at the taxing rate dictated by your city or school district. Now if your school district tax is determined by total income or Adjusted Gross income from your tax return and not just earned income, then you could owe additional tax. You could try deleting all your school district withholding from your W2 and see if the amount changes. If it doesn't change, then TurboTax is not reducing your school tax by the amount from your W2. Then I would review the coding on the W2 input and in your state tax return to insure the same school district is syncing up in TurboTax. If it increases by the amount of the withholding, you know you owe school tax on your total income, not just your W2 income.
I'm having the same problem. I enter school tax withheld in the federal W2, and it doesn't show up in the school tax return. There doesn't seem to be anyway I can correct this and enter the withholding manually. I tried so many times to contact you, Turbo tax. I'm thinking about filing the state/school as paper so I can fix the withholding. But this is not what I paid for. Turbo tax, hello, where are you? (i just had to change Turbotax to Turbo tax to even submit this.
I was able to fix my problem with the help if a turbotax online agent. I was entering the School District code exactly as it was printed in the W2 (0302-Hillsdale SD) and when I changed it to simply 0302 it calculated correctly.
That was the solution. I had to remove everything in the school tax withhold description except the 4 digit number and it worked. A great guy named John from Turbo tax did eventually call me and helped. Thanks weldon for you help as well.
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