While you're on this tab, you can click the question mark in the upper right hand corner and then click the Use Federal box, and a help file will open that describes what the "Use Federal" box will do or is used for:  From the Help file for "Use Federal": 

"Select if this employee's state Status and Personal exemptions are the same as the federal Filing status and Personal exemptions entered in the Employee Setup window (Entry Info tab). You cannot select Status and Personal exemptions in this window.

This check box is automatically selected when a new employee is set up or when an employee is added during Post Checks.

If the state Status and Personal exemptions differs from the federal settings, first clear this check box and then make the selections."