Is that seriously true that both spouses have to choose the same deduction method?? I had no idea! We were planning to have my husband itemize since he has tons of deductible expenses while I'd take the standard deduction. Will this really not work?

Yes, it's absolutely true and it's one of the biggest "gotchas" with married filing separately. If one spouse itemizes, the other MUST also itemize - even if they have very few deductions. This often means the second spouse ends up with a very small itemized deduction amount that would have been much better served by taking the standard deduction. This requirement often wipes out much of the potential benefit of filing separately, which is why it's so important to run the numbers both ways. The tax code deliberately makes MFS less advantageous in most situations to encourage joint filing.

I've had similar experiences with TurboTax too. These programs often show "refund estimates" before they've calculated everything. Sometimes they don't include state taxes or certain penalties until the very end of the process.

I think I'm over the income limit for direct Roth contributions too. Do you know if I'd run into any issues if I go with the backdoor Roth approach mentioned above? I'm wondering if there's a timing issue since I already made the Traditional contribution a few months ago.

The timing shouldn't be an issue for the backdoor Roth approach. You can convert Traditional IRA funds to Roth at any time - there's no deadline for that part of the process. The only timing concern is getting your contribution classified correctly (as non-deductible) on your tax return. Just make sure you file Form 8606 with your taxes to document the non-deductible contribution, then do the conversion whenever you're ready. Some people prefer to wait a bit between contribution and conversion, while others do it immediately. Either way works fine from a tax perspective.

You're on the right track! When both spouses are over the income limit and covered by workplace plans, backdoor Roth is typically the way to go. Just make sure you're keeping separate IRAs (never combine them) and each filing Form 8606 annually.

How would I know if the basis wasn't reported? Is there something specific to look for on the form? Because I think this might be exactly my issue.

Look at your 1099-B form from your brokerage - there should be a column that indicates whether the cost basis was reported to the IRS. Sometimes there's a checkbox, other times it might say "Covered" versus "Noncovered" transactions, or it might explicitly state "Cost basis not reported to IRS" for certain transactions. Noncovered securities (typically those acquired before certain dates or transferred from other brokerages) don't have their cost basis automatically reported to the IRS, so the IRS only sees the sale proceeds. In those cases, they might assume your entire proceeds are gains unless you properly report the cost basis on Form 8949.

Will the IRS just cancel the debt if I can show the broker's forms match what I reported? Or will I need to prove something more?

That's actually a really good point that I hadn't considered! My income is definitely below the Roth limits (about $95k for 2023), but maybe my advisor was assuming I'd be doing a backdoor Roth? I'll ask them specifically if that's what they were suggesting. If they were just mistaken about regular Roth contributions needing Form 8606, it might be time to find a new advisor...

Definitely worth a clarifying conversation with them. If your income is $95k, you're well within the limits for direct Roth contributions ($138,000 for single filers in 2023), so backdoor wouldn't be necessary. Some tax advisors who deal primarily with higher-income clients get so used to recommending backdoor Roth strategies that they sometimes default to that advice without checking if a direct contribution is possible. Or they might just be confusing the reporting requirements between traditional and Roth IRAs.

This happened to me too! Fidelity assumed my April contribution was for the current year not the previous year. Took forever to get fixed and they had to generate corrected tax forms.

Just checked my pay stub and it does say "Single" for filing status, but there's nothing about multiple jobs. I do max out my 401k ($22,500/year) and have an HSA that I put about $3,000 into annually. Could those really affect my withholding that much? I thought those were smart financial moves.

Those are absolutely smart financial moves! The issue isn't that you're doing anything wrong - it's that the withholding system doesn't always account for them perfectly. When you contribute to 401k and HSA, your taxable income for each paycheck is lower, so the system withholds less tax. However, those contributions don't reduce your tax brackets - they just reduce your total taxable income. If you're near a bracket threshold, this can create a withholding gap. This explains the difference between you and your coworkers too. If they're not maxing retirement accounts, their withholding calculation is more straightforward. Your situation is actually financially better (huge retirement savings), but it requires manual adjustment to your withholding to avoid the surprise tax bill.

The IRS calculator isn't technically broken, but it's not great for complex situations. It works best for people with one job, standard income, and no special circumstances. The moment you add variables like education expenses, multiple income sources, or significant pre-tax deductions, it falls apart. I found the calculator on smartasset.com to be much more accurate for estimating actual withholding needs. It lets you input more details about your specific situation.

Thanks, I'll check out that other calculator. I was starting to think I was going crazy because I followed the IRS calculator recommendations exactly and still ended up owing over $2k. Good to know it's not just me!