The IRS says that if an employee qualifies, he or she can also use Form W-4 to tell an employer not to deduct any federal income tax from his or her wages. To qualify for this exempt status, the employee must have had 1) no tax liability for the previous year and 2) must expect to have no tax liability for the current year. (However, if the employee can be claimed as a dependent on a parent's or another person's tax return, additional limitations may apply; refer to the instructions for Form W-4.)
In addition, a Form W-4 claiming exemption from withholding is valid for only the calendar year in which it's filed with the employer. To continue to be exempt from withholding in the next year, an employee must give you a new Form W-4 claiming exempt status by February 15 of that year. If the employee doesn't give you a new Form W-4 you will either withhold tax as if he or she is single, with no withholding allowances or, if you have an earlier Form W-4 (not claiming exempt status) for this employee that's valid, withhold as you did before.