I can show you the easy steps, kate11172002.
The option to exempt an employee with a tax withholding is through their profile. Let me show you how:
These changes will take effect to future payrolls since QuickBooks don't retroact. You can check out this article on how we calculate employee taxes.
Let me know if you need more help. Take care!
It's good to see you here in the Community, @keithmyer.
I'll guide you on where you can see the option to exempt your employee from state/federal tax.
You can select None to exempt your employee to any state withholding. On the other hand, you can choose Don't Withhold to make an exemption to federal taxes.
Please see the sample snips attached on where to click it based on the steps shared above:
For more details about making a tax exemption in QuickBooks Desktop, check out this great resource: Learn how to set up tax exempt employees in QuickBooks Desktop Payroll.
Know that you can always get back to me here in the Community if you have any other questions. I'll be around to lend a helping hand. Keep safe!
Thanks for the help. However, when I choose none under the state, quickbooks does not allow me to choose this option. A message appears that says I must choose a state. My employees are exempt from Unemployment tax because we have fewer that 4 employees and hence the state does not allow us to register for unemployment.
You must be able to select the None option for the State Subject t Withholding as shown by BettyJaneB above. If the system doesn't allow you to select that option, you can perform some basic troubleshooting steps to isolate the issue. I'm here to guide you how.
First, I recommend updating your QuickBooks Desktop to the latest release to keep your software up to date and get the latest features and fixes.
Once done, download the latest tax table update to stay compliant with the paycheck or payroll setup and calculations. You can use this article as your guide: Get the latest payroll tax table update.
Moreover, you can open the topics from this link for more hints about QuickBooks and payroll: Find QuickBooks help articles, Community discussions with other QuickBooks users, video tutorials, a....
If you have any other questions about payroll and employee setup, please let me know by adding a comment below. I'm more than happy to help. Keep safe!