A federal tax on earned income,when you look at your paycheck, it can be frustrating to see an alphabet soup of deductions then ends up taking a chunk out of your earnings.
Employment Rates. Employers must take Social Security tax out of their employees’ wages at 6.2 percent, up to the annual wage limit of $113,700, as of 2013. Employers pay this same amount for each employee. OASDI, which stands for Old-Age, Survivors and Disability Insurance, is a federal program that provides benefits to qualified retirees and disabled individuals and their beneficiaries. OASDI/EE is a federal tax on earned income. When you look at your paycheck, it can be frustrating to see an alphabet soup of deductions then ends up taking a chunk out of your earnings. Knowing all the acronyms helps you figure out where all that money is going. Social Security Taxes. OASDI/EE stands for old age, survivors and disability insurance, employee's earnings. The Social Security tax has two parts, one paid by the employee and the other paid by the employer. OASDI Calculation. As of 2012, you would calculate OASDI tax at 4.2 percent of taxable wages up to $110,100 for the year. Let’s say you earn weekly wages of $620, including a mileage reimbursement of $30. You also pay $70 toward your pretax health insurance plan. Before you determine taxable wages for OASDI purposes, you must determine your gross wages; this is your entire pay before deductions. Gross pay includes your regular hourly wages or salary, plus additional compensation such as bonuses, commission, overtime or retroactive pay for salary or wage increases. Calculating Your FICA Taxes. The Social Security portion of the FICA tax is a flat 6.2% of gross compensation for wage earners, whereas the Medicare portion of the tax is 1.45% . These taxes are levied on both the employee and employer so, for every dollar taken from your paycheck, your employer is also paying a dollar.  Your OASDI taxable wages are your earnings that are subject to OASDI tax, which is also called Social Security or FICA tax. Your taxable wages for OASDI purposes might be either your gross wages or your wages after applicable deductions. Before you determine taxable wages for OASDI purposes, you must determine your gross wages; this is your entire pay before deductions. Gross pay includes your regular hourly wages or salary, plus additional compensation such as bonuses, commission, overtime or retroactive pay for salary or wage increases. Employees and Employers Pay. Payments from the OASDI system are made to surviving spouses and children, disabled workers and retirees who earned enough points to be eligible for the benefit during their working lives.  Misconceptions. The OASDI tax is separate from your federal income taxes that you must also have withheld from your paychecks by your employer. In addition, you do not get to claim tax deductions to reduce your OASDI tax like you do your federal income taxes, nor does your tax rate depend on your filing status. OASDI stands for old age, survivor and disability insurance, which is more commonly referred to as Social Security. To pay for these programs, the federal government imposes a tax on earned income that must be withheld by your employer. The OASDI deduction on your paycheck shows how much was withheld.
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