QuickBooks Desktop 2020 Manual Payroll After Sunset

Learn how to keep running payroll in QuickBooks Desktop 2020 after the May 2023 service discontinuation using manual entry and external payroll services.

QuickBooks Desktop 2020 officially reached the end of its supported lifecycle on May 31, 2023. With services discontinued, the subscription-based payroll add-ons (Basic, Enhanced, and Assisted) can no longer pull tax table updates or process direct deposits through Intuit's servers. However, you can continue using QuickBooks Desktop 2020 to run your payroll locally. By switching to manual payroll, you maintain full control over your company file without needing an Intuit subscription or an upgrade.

Enabling Manual Payroll in QuickBooks 2020

QuickBooks has a hidden setting that allows you to calculate payroll taxes manually. This feature is identical across QuickBooks Desktop versions, so the process for turning it on in 2020 is the same as it is for older or newer releases.

To enable manual payroll calculations:

1. Open your QuickBooks Desktop 2020 company file.
2. From the top menu, navigate to Edit > Preferences.
3. Select Payroll & Employees from the left sidebar, then click the Company Preferences tab.
4. Click the link that reads No Payroll or Set my company file to use manual calculations (the exact wording depends on your current payroll status).
5. QuickBooks will display an information window explaining manual payroll. Check the box to acknowledge that you will calculate and enter your own taxes.
6. Click Finish, then select OK to save your preferences.

Once enabled, QuickBooks will no longer attempt to connect to Intuit's servers for tax table updates. When you create a paycheck, the software will allow you to manually input the federal and state tax withholdings.

Where Do the Tax Figures Come From?

Because QuickBooks 2020 can no longer download automated tax table updates, you are responsible for looking up the correct withholding amounts.

When you process a manual paycheck, you will need to calculate the deductions based on current tax brackets. You can find the necessary figures using:

• Federal Income Tax (FIT): The IRS Publication 15 (Circular E) and the IRS Tax Withholding Estimator.
• Social Security and Medicare (FICA): The current percentage rates and annual wage bases published by the IRS.
• State and Local Taxes: Your state’s department of revenue or taxation website.

You must enter these calculated amounts directly into the paycheck preview window before finalizing the check. If you need help troubleshooting paycheck templates or employee setup, our general QuickBooks help center offers additional resources.

Recording Externally-Run Payroll

If you prefer to use a third-party service (like a local accountant, a dedicated payroll bureau, or a standalone provider) but still want to keep your QuickBooks 2020 data accurate, you do not need to use the built-in manual calculation tools. Instead, you can record the payroll journal entries after the fact.

To record externally-run payroll:

1. Gather the payroll registers or summary reports from your outside provider.
2. In QuickBooks Desktop 2020, go to Banking > Write Checks (or use Employees > Pay Employees if you prefer to cut checks in the software, leaving the tax lines at zero and adjusting the net manually).
3. On the Expenses tab, break down the gross wages, taxes, and deductions.
   • Enter the Gross Wages as a positive number mapped to your appropriate Payroll Expense accounts.
   • Enter the Tax Liabilities (FICA, FIT, SIT, etc.) as negative numbers mapped to your respective Payroll Liability accounts.
4. Verify that the net check amount matches the actual funds withdrawn from your bank account to pay your employees or the third-party provider.

Maintaining Your 2020 Company File

Running manual payroll is a highly effective way to keep your accounting localized, but it requires careful data entry. As long as you apply your tax calculations accurately and back up your company file regularly, QuickBooks Desktop 2020 will continue to process your payroll offline indefinitely. To ensure your historical pay stubs and liability records remain perfectly intact, establish a weekly backup routine to a local or external drive.