On
the W-2 input screen, you have to make sure that you've checked
"Other" rather than "US Address" when you're entering your
Canadian employer's address. Then you
also need to make sure that "Foreign Address" is checked rather than
"APO, FPO, or DPO".
Once you
check "Foreign Address" the address boxes change to accommodate the
foreign style. If these boxes aren't
checked properly, then TurboTax will be thinking there should be a state &
zip code when there isn't one, and you'll get an error.