I ended up having to purchase another brand's tax kit to be able to print correct W2's by manually entering the employees' W2 information, including the 6 digit PSD code. I was also able to use the second line of box 19 and 20 to manually add the Local Services Tax amount and LST locality name. This was also missing from the QBO W2's because QBO considers LST a deduction instead of the capped tax that it is. For some reason QBO Payroll cannot do what Desktop Enhanced Payroll did when it comes to PA local taxes. I followed instructions from QB Payroll Support to leave feedback about these issues through QBO but I don't have high hopes of a resolution because I don't think QBO understands anything about PA local taxes, like how many Political Subdivision Codes PA has and that's why they are 6 digits and not 2.
