Form W-4 is used to communicate the marital status and number of exemptions to be used for Federal Withholding taxes. W-4 forms should be filled out and returned to the employer within 10 days of an employee's hire, and the exemptions claimed should be put into place with the next payroll process (in iSolved, go to Employee Pay > Tax Information).
The employee can change the number of exemptions claimed at any point throughout the year by submitting a new W-4.
The W-4 should be kept (either in paper form or electronic form - use Human Resources > Employee Documents in iSolved) for at least four (4) years after the date of the last return the employee would have filed using that form's information (e.g.: a form used for 2017 payroll should be kept until April 15, 2022...four years from the filing deadline for 2014 income taxes).
If an employee does not fill out a W-4 (or does not have a form on file to revert back to in which they are not claiming "exempt"), the appropriate tax setting in payroll is Single with zero (0) exemptions.
If the employee claims "exempt" on their W-4 in one year, they are required to submit a new W-4 by February 15th of each subsequent year to continue their "exempt" status. If this does not occur, the employer should revert to using the exemption status claimed on the last W-4 prior to the "exempt" claim.