When an employee claims exempt status in the W-4 Federal tax form, the tax record that is generated in the Federal tax Info section of the Payroll > Tax Definitions screen of People is automatically assigned an effective end date of February 15 of the following calendar year. This way, you don’t need to manually assign an effective end date to the tax record in the event that the employee doesn’t submit a new form by February 15 of the following year, which is when exemption status ends.
For example, if an employee submits the form on November 1, 2020, the resulting tax record will automatically have an effective end date of February 15, 2021.
The effective end date of the record is updated if the employee submits a new W-4 Federal form before February 15. Continuing with the above example, if an employee submits a new W-4 Federal form on January 12, 2021, and they don’t claim exempt status, the effective end date of the existing tax record is updated to January 11, 2021, and the new tax record won't have an effective end date assigned.