IRS Arbitrage

I have been asked this questions many times, Should I write 5 exemptions so I can keep all my money and pay the taxes back in April? While this is a great way to make a small return it is very difficult.

In theory:
1) You could take numerous exemptions
2) Multiply your weekly pay by your tax bracket
3) Put that amount in a ING Direct account or high yield savings account
4) In April pay your taxes with the balance in the savings account
5) You should have a small profit that could be compounded over the years

In practice:
1) Get more money in pay, spend more money

The problem is individuals are not discplined enough to put the money in the high yield savings account. Some feel that making $200 not enough compesnation for there effort, but $200 can get you closer to that new Coach purse or set of golf clubs.