<prompt> Human: I have the option as im sure many do, to completely go exempt from federal income tax during my pay periods, and get my paychecks without any taken out.If I do this ALL YEAR, and pay them back by April 15th.Is there any downside to doing this?I plan to invest the money throughout the year, hopefully fluff it up, and then give it back to uncle sam during tax time. Am I insane?  <response>: Yes, there is a penalty for this. The US has a pay as you go system and if you withhold way too little more than 1000 less than your tax burden, you are subject to the penalty. Edit: Its more complicated than that, but you would hit the penalty regardless. 