Is there any point to Traditional or Roth IRA when Married Filing Separately?

Thanks for the clear explanation. So is there any scenario where it would be worth contributing to either type while filing separately? My income is definitely over $10K. Also, what's this Form 8606 - is it complicated to fill out?

There can still be value in making non-deductible contributions to a Traditional IRA even when filing separately with income over $10K. While you don't get the immediate tax deduction, the investment growth remains tax-deferred, which is still valuable over time - you won't pay taxes on dividends, interest, or capital gains as they accumulate. Form 8606 isn't particularly complicated. It's designed to track your non-deductible contributions so that when you eventually withdraw the money, you won't be taxed again on amounts you already paid tax on. Most tax software will guide you through this process if you indicate you made non-deductible contributions.

Does taxr.ai handle backdoor Roth situations too? I'm filing MFS and wondering if that might be a workaround for the Roth contribution restrictions.

How accurate is this tool? I've been burned by tax software before that missed things specific to MFS status. Does it actually know all those weird MFS-specific rules?

Yes, taxr.ai definitely handles backdoor Roth situations! It actually suggested this as a potential strategy for my situation and walked me through all the steps and tax implications. It showed me exactly how to report everything correctly to avoid raising red flags with the IRS. The accuracy has been impressive. It specifically highlighted several MFS-specific rules I had no idea about, including the IRA contribution limitations and even some tax credits that phase out differently for MFS filers. It seems to have a really comprehensive understanding of those weird edge cases that other tax software might miss.

Wait, how does this actually work? The IRS phone lines are impossible to get through - are you saying this magically gets you to the front of the queue somehow?

Sorry, but this sounds like BS to me. I've tried EVERYTHING to get through to the IRS and nothing works. They're ALWAYS "experiencing higher than normal call volume" and hang up. No way there's some magic service that can get through when nobody else can.

It works by using an automated system that continually redials and navigates the IRS phone tree until it gets a spot in the queue, then it calls you and connects you directly. It's not magic - it's just automating the frustrating part of constantly redialing and waiting. I was super skeptical too! But I was desperate about my MFS/IRA question and nothing else was working. The difference is they have systems that can stay on hold perpetually while constantly trying to get through the busy signals. Once they secure a spot in the queue, they call you. I went from weeks of failed attempts to talking with an actual IRS representative in about 12 minutes.

Unfortunately yes, we have to file separately this year. My spouse is on an income-based repayment plan for massive student loans, and filing jointly would increase the payments by several hundred dollars monthly. We've done the math and MFS is definitely better for our overall financial situation, even with all the disadvantages. Just trying to figure out the best approach to retirement savings given this constraint.

That makes complete sense about the student loan situation. Income-based repayment is one of the few scenarios where MFS often is the right choice despite the tax disadvantages. In that case, I'd suggest looking into whether your workplace offers a 401k or 403b. Those retirement accounts don't have the same MFS restrictions as IRAs do. You could max out your contributions there instead. If self-employed, a SEP IRA or Solo 401k might be better options that aren't subject to the same MFS limitations as traditional and Roth IRAs.

Great question! If you did not live with your spouse at any time during the year, the MFS restrictions on IRA contributions are significantly reduced. If you lived separately for the entire year, you're treated almost like a single filer for IRA contribution purposes. For Traditional IRAs, you can deduct contributions subject to the normal income limits that apply to single filers. For Roth IRAs, you can contribute subject to the phase-out limits that apply to single filers (which are much higher than the $10,000 limit for MFS when living together).

This is really helpful advice! I hadn't even thought about HSAs as a retirement savings strategy. Quick question about the spousal IRA - would my spouse need to have ANY income to contribute to a spousal IRA, or can it work even if they have zero income? Also, are there any specific requirements about how the contribution needs to be structured when filing separately?

Great question about spousal IRAs! For spousal IRA contributions, the spouse receiving the contribution can have zero income - that's actually the whole point of the spousal IRA rule. However, the contributing spouse needs to have enough earned income to cover both their own IRA contribution AND the spousal contribution. When filing MFS, spousal IRA contributions are still subject to those same restrictive rules if you lived together during the year. So if your combined income exceeds the thresholds and you lived together, the spousal IRA would face the same $10K phase-out limits for Roth or loss of deductibility for Traditional. The contribution structure is straightforward - you just make the contribution directly to your spouse's IRA account. The IRS doesn't care which bank account the money comes from, just that the contributing spouse has sufficient earned income to support both contributions. Most IRA providers handle this routinely. HSAs really are underrated for retirement savings! After age 65, you can withdraw for any purpose (not just medical) and only pay regular income tax, making it function like a Traditional IRA with the added benefit of tax-free medical withdrawals.

This is really solid advice! I'm in a similar situation where MFS is necessary for student loan reasons, and it's reassuring to hear that this constraint is temporary. One question - when you mention the backdoor Roth conversion strategy, does this actually work with MFS filing status? I thought the income limits that prevent regular Roth contributions would also complicate the backdoor approach. Also, do you know if there are any timing considerations for when to potentially switch back to filing jointly? Like, is there a specific point in the student loan repayment process where it makes sense to recalculate the benefits?