Part 1 – Complete this part to calculate your withholding allowances for New York State and Yonkers (line 1 of Form IT-2104). Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay.To claim exempt, write EXEMPT under line 4c. The w-4 has five steps we'll go through each step briefly then show an example of a young person completing his first w-4. To claim exempt status, you must meet certain conditions and submit a new Form W-4 and a notarized, unaltered Withholding Certificate Affirmation each year. Line seven indicates Exempt. This means no taxes will be taken out each pay period. A W4 form, or "Employee's Withholding Certificate," is an IRS tax document that employees fill out and submit to their employers. To claim you are exempt, you write "Exempt" on the new W-4 form in the space below Step 4(c). You must give Form NJ-W4 to your employees to fill out and return to you.