Annual Bonus Check - Changing Witholding to "Exempt" a bad idea?

[Mike M.]

Hey all,

I have a regular W2 job that provides a substantial bonus check annually. Over the years I have heard of gossip that changing my withholding for this single paycheck is the best tax strategy. My employer combines my regular paycheck and bonus paycheck in the same item.

Common sense would tell me that at the end of the day it wont effect taxes paid over the course of the year, and rather this is a "would you rather it pay it now, or pay it later" situation. The latter being in the form of a bigger return at year end, rather than owing money. That being said I understand bonuses are taxed higher, so maybe going exempt is a viable tax strategy for this one pay period?

Thanks