A payment plan has nothing to do with filling out a W-4 claiming exempt.
This is what the W-4 form says:
"I claim exemption from withholding for 2017, and I certify that I meet both of the following conditions for exemption.
• Last year I had a right to a refund of all federal income tax withheld because I had no tax liability, and
• This year I expect a refund of all federal income tax withheld because I expect to have no tax liability.
Under penalties of perjury, I declare that I have examined this certificate and, to the best of my knowledge and belief, it is true, correct, and complete"
Therefore, if you had *any* tax liability in the previous year you cannot claim exempt and if you expect any tax liability in 2017 you cannot claim exempt. "I can just long as I switch it back ahead of time" indicates that you really do not believe that the second condition is "true, correct, and complete".
It is not likely that anything would every come of it, but if you are under withheld because of claiming exempt it is possible. You can do what you want, but you must have had 2nd thoughts about this or you would not have asked the question. I am just pointing out the requirements, language and perjury statement on the W-4 form.
As SweetieJean said - increase the exemptions which will lower the withholding (maybe to zero) which will accomplish the same thing without filing what might be a false statement.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
