Learn how to set your employee’s Federal or State Withholding (or Income Tax) as exempt.
Your employees can claim exempt on their Federal Form W-4 or state form if they meet certain requirements. Exempt means they won’t have any Federal or State Withholding taxes deducted from their paychecks.
If your employee claims exempt, you should have a copy of the W-4 or state form for your records. Here’s how to set the Federal or State Withholding to exempt in QuickBooks.
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Set your employee’s Federal or State Withholding as exempt
QuickBooks Online Payroll
- Go to Payroll, then Employees.
- Select your employee.
- From Tax withholding, select Edit.
- Select the applicable Federal W-4 form if prompted.
- In the Federal Withholding Filing Status ▼ dropdown, select Exempt (if applicable).
- In the State Withholding Filing Status ▼ dropdown, select Exempt (if applicable).
- When finished, select Save.
QuickBooks Desktop Payroll
- Select Employees, and then Employee Center.
- Select the employee you want to exempt.
- Select Payroll Info, and then select Taxes.
- From the Federal tab, on the W-4 Form ▼ dropdown, select the applicable form.
- In the Filing Status dropdown▼, select Exempt.
- Select the State tab, and in the Filing Status dropdown▼, select Exempt.
- Select OK to save.