Altogether is an adverb meaning entirely, all told, or on the whole. It doesn’t function in any other way. The two-word all together is the appropriate phrase wherever the adverbial altogether wouldn’t work. So, for example, we are all together is correct because all together is not an adverb in this case.
Examples
These writers use altogether correctly:
As we enter the new legislative session, our state faces challenges that are daunting, yet not altogether impossible. [The Detroit News]
Altogether, I have 15 pairs in assorted colours and styles—an eye-watering financial outlay. [Daily Mail]
On several occasions, Mr. Obama’s planned trips have been delayed, altered, shifted, shrunk and even canceled altogether as domestic politics forced him to stay at home. [New York Times]
With many yachtsmen abandoning the region altogether, industries dependent on the routes are being devastated. [CTV]
And here are a few examples where the two-word all together is more fitting:
The current system, however, did help bring it all together. [Washington Post]
All together now: “Gag me with a spoon! Grody to the max!” [Guardian]
But they began with an idea, and they put it all together using a blend of common sense, business smarts and even by being willing to take a punt. [The Australian]
We have lots of oil companies, yet gas is basically the same price everywhere and increased, as though in lockstep, all together. [Montreal Gazette]
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