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Slightly OT:
I'd go with number 1. (That what I do). The problem with number 2 is, it's illegal. 
Legally you can NOT "exempt" yourself from withholding...you owe income tax as you pay it. If the amount you owe when you file your tax return is too high, you will be assessed penalties for not "paying as you earn."
HOWEVER, there is a sort of "loophole". (Isn't there always when it comes to taxes?) The IRS considers all payroll witholding reported on the W2 as "paid as earned" through the year. So, you can essentially not pay any withholding for like 10-11 months. But then say, in your last two or three paychecks, request large amounts to make up for it by filling out new W-4 forms. It's sort of like paying a lump-sum to the IRS, you're just doing it a couple months earlier via payroll withholding....
The two best strategies seem to be:
1. Get your witholding as close to taxes as possible, as Jammers has done.
2. Don't do any withholding, but invest/save money on your own, and plan on making a lump sum payment to the IRS.
I'm considering starting the latter.
1. Get your witholding as close to taxes as possible, as Jammers has done.
2. Don't do any withholding, but invest/save money on your own, and plan on making a lump sum payment to the IRS.
I'm considering starting the latter.
Legally you can NOT "exempt" yourself from withholding...you owe income tax as you pay it. If the amount you owe when you file your tax return is too high, you will be assessed penalties for not "paying as you earn."
HOWEVER, there is a sort of "loophole". (Isn't there always when it comes to taxes?) The IRS considers all payroll witholding reported on the W2 as "paid as earned" through the year. So, you can essentially not pay any withholding for like 10-11 months. But then say, in your last two or three paychecks, request large amounts to make up for it by filling out new W-4 forms. It's sort of like paying a lump-sum to the IRS, you're just doing it a couple months earlier via payroll withholding....
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