OASDI Tax Definition

OASDI federal taxes paid by all income sectors in the US If you are self-employed, you will have to pay OASDI tax as part of your self-employment taxes. If you are an employee, your employer will deduct OASDI taxes from each of your paychecks.

OASDI federal taxes paid by all income sectors in the US If you are self-employed, you will have to pay OASDI tax as part of your self-employment taxes. If you are an employee, your employer will deduct OASDI taxes from each of your paychecks. The OASDI Social Security tax is the one used for the federal Social Security program. Some of the paychecks refer to OASDI as SS / EE. OASDI is an acronym for Old Age, Survivors and Disability. Payment of OASDI benefits depends on the amount of money contributed by the recipient through lifetime recipients. Employee Rates The employee rate for OASDI tax is 4.2 percent of all earned wages, up to a maximum limit of $ 106,800 per year. Any income earned over $ 106,800 is not subject to OASDI tax. Because the OASDI tax is separate from federal income tax, all employees pay the same percentage of OASDI tax, regardless of any income tax credits or deductions that the employee may claim on their annual tax return. Employer Paying Employers also have to pay OASDI taxes on wages paid to employees. In fact, employers pay a higher OASDI rate of 6.2 percent of all employee wages. When combined, the employee and employer together pay 10.4 percent OASDI tax on employee wages, up to $ 106,800 in wages per year. The employer withholds the employee’s share of each of the employee’s paychecks, and the employer then adds his share to the employee’s withholding. Self-Employment for the self-employed must also pay OASDI taxes, although the procedure and the name is a bit different than it is for employees. Self-employed workers must pay an estimated self-employment tax each quarter. The self-employment tax, like that of 2011, is 13.4 percent of all income, again up to $ 106,800 per year. The 13.4 percent is divided into 10.4 percent OASDI tax and 3 percent Medicare tax. In essence, the self-employed pay the employer portion (6.2 percent) and the employee portion (4.2 percent) of OASDI taxes.

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