I live in Westchester County but work in NYC. My question is can Turbo Tax fill out the NYC 1127 form that is required to complate your taxes or must I do it manually.

According to the TurboTax web site, their software package for NY State includes form 1127. See:
2009 State Forms for Personal Tax Returns - TurboTax® Support (http://turbotax.intuit.com/support/kb/update/form-availability/1086.html?mode=detail&formsetid=S2009ZNY&family=PerState&state=New+York)