Update: Thanks to my friend and his excellent investigative accounting skills, I've learned this is not such a good idea after all. Unless you are very productive with that money you withhold, you won't beat the tax they asses you. I appreciate the tax advice Tyler.
Why didn't I think of this before. You can gain interest on the money that is withheld from your paycheck to pay your taxes. Simply choose to withhold no money in the beginning of the tax season, and then greatly increase your withholding as tax season draws near. With a little bit of financial discipline and some buffer income you can put that money to good use --instead of giving the government and interest free loan. Mental math says at 50k per year, that money in a no risk investment will return at least $300. That's about $100 per hour of work that it takes to do the research and fill out a few W-4 forms.
And with that money in a trading account you have enough money to chase a more sizable return. Be careful of course, because the taxes will still be due at the end of the year.
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