First the values on the paycheck and W-2 almost always differ somewhat and the IRS wants an exact match. (For example: Your paycheck (or paystub) will show your total wage. The W-2 box 1 will show the *taxable* wage, that can be different, and the non-taxable part will be reported in other boxes on the W-2.)
This can delay any refund by weeks.
You also will not know what to enter for the various boxes on the W-2.
Employers had until Jan 31 to issue the W-2. If it is different you will probably have to amend which takes about 4 months to process.
IRS regulations require you to either attach a copy of the W-2 to your mail tax return or have it in your possession if you e-file. The IRS can ask you to send them a copy of the W-2 even if you e-file so you must have it.
If you mail file then you are required to attach a copy of the W-2 to the tax return or the IRS will return it to you unprocessed. While you are not required to submit W-2's with e-filed returns, you still must have the W-2 in your possession since the IRS can ask for it when they review your e-filed return.
If you do not receive your W-2 by February 14, then you can use your paycheck and file a 4852 form, but you must follow the IRS rules in order to do so.
[Paraphrased from IRS rules]
Can you file without having received your W-2? Yes, but only if you have not received it by the end of February, and you have contacted your employer and attempted to obtain it, and you still have not received it then you contact the IRS (see the link below), then if the IRS is not successful in getting your W-2, you can use form 4852 in place of your W-2. But you MUST speak to the IRS before doing so. Otherwise, you cannot file before you receive your W-2.
The IRS has not announced when 2020 tax filing will start in 2021 - probably around Jan 27 - last year it was late January.
Although TurboTax will be accepting some e-filed returns early they will NOT be e-filed to the IRS which will not process any return until they open for e-fileing. TurboTax stores those returns filed early until the IRS opens for business, only then will you get an e-mail telling you if the return was accepted or rejected by the IRS.
Only the simplest returns can be transmitted to TurboTax early. Some forms will not be finalized until late Jan. and some later then that.
Why does TurboTax allow early filing? Because their competitors do - It is a marketing ploy.
Filing early with TurboTax before the IRS opens is a really BAD IDEA.
1) If you discover something that is wrong on your return, receive a W-2 that is different, receive some other tax document that was not on the return that you filed then there is NOTHING that you can do about it other than wait to see if the IRS accepts or rejects the return after they open. If rejected you can correct and file again, but if accepted then the only remedy is to amend which can take 4 months to process.
2) You must remember to check back after the IRS opens (or check for an e-mail) to confirm that the IRS has accepted or rejected the return. If rejected, then it was never filed at all and must be corrected and re-filed. Every year many taxpayers that file early, forget to check back and only discover months later that they never actually filed because if was rejected by the IRS but they had forgotten about checking back after filing with TurboTax.
3) While the IRS does conduct some per-opening polling tests and does accept some returns early, they will not process those until after the official opening. There is a reason to test and that is to discover any problems with it's systems. A couple of years ago a test went bad and several thousand "test" returns were lost. The IRS was able to recover those but it delayed refunds for some by months.
There is no real advantage to file before the IRS opens but there are several disadvantages to do so.
No. You have to enter ALL of your 2020 income before you file your tax return. Employers have until February 1 to issue your W-2's WAIT for your W-2.
Please be careful about being in too much of a hurry to file your next tax return. Many tax forms are not available at the very beginning of the tax season, so you have to wait for your forms. The software still needs updates at the beginning of the tax season.
Although the software will allow you to e-file in early January, the IRS does not begin to accept the e-files until almost the end of January. So your return just sits on the server. If you realize that you made a mistake or left something out—as many people do—you cannot change it.
Every year we see people who are in such a rush to file that they file incorrectly and incompletely. If you file too early and leave out a W-2 or a 1099, or forget to enter information, you will end up having to amend your tax return---and that takes months. Employers have until February1. 2021 to issue W-2's----and ALL of your 2020 W-2's have to be on the same tax return. Many of the 1099's and 1098's you need do not arrive until late January or sometime in February. If you are getting Earned Income Credit or Additional Child Tax Credit, the IRS is going to hold your refund until the end of February no matter how early you file. There seems to be a greater chance of "early" returns being reviewed and those refunds are delayed, or early returns are more often subject to identity verification--which will also delay processing. Filing too early may just be a recipe for a delayed refund. It might go more smoothly for you if you wait until at least mid-February to file instead of e-filing during the first minute that you can do it.
We know that the IRS is already revising the 2020 Form 1040 because of the 2nd stimulus. That means all tax preparation software programs will also have to be re-programmed and updated. Those changes could take until sometime in late January or even longer—we do not know yet. Do NOT be in a hurry to file your 2020 tax return until more is known. It is never a good idea to file early, and it would be especially foolish to file an early 2020 return.