Employee does not want fed taxes withheld

Hello, jlbelchera.

I'll share the steps to help you set up an employee to not hold federal and state withholding taxes.

In QuickBooks Online, you'll have the option to mark the employee as tax-exempt in the employee's profile. I'll show you how.

1. Go to Payroll, then Employees.
2. Select your employee.
3. From Tax withholding, select Edit.
4. Select the applicable Federal W-4 form if prompted.
5. In the Federal Withholding Filing Status ▼ dropdown, select Exempt.
6. Once done, hit Save.

For your reference, check out this article for a complete guide: Exempt your employee from Federal or State Withholding.

Additionally, I'd like to provide the following resources for future reference and help while processing payroll in QBO:

• Run payroll reports
• Payroll Tax Compliance Links

If there is anything else that you need, please let me know. We're always here to help you.

I recommend requesting a new W4 form indicating "exempt" from federal taxes, otherwise, if the IRS determines that an employee does not have enough withholding, you will be notified to increase the amount of withholding tax by issuing a "lock-in" letter that specifies the withholding arrangement permitted for the employee.  Once a lock-in rate is effective, an employer cannot decrease withholding unless approved by the IRS, so request a W4 from employee before just not withholding their federal withholding.

https://www.irs.gov/pub/irs-prior/fw4--2022.pdf