Home Economy What is the OASDI deduction?

What is the OASDI deduction?

by Lisa Baker

The OASDI tax (OASDI, old age, survivors and disability insurance), old-age, survivors and disability insurance, is more commonly known as the Social Security tax. Your employer may write OASDI on your pay stub to indicate the amount of money deducted from your paycheck for Social Security taxes that should be taken from your pay by your employer.

OASDI deductions

The federal government requires your employer to deduct money from your paycheck to pay your OASDI taxes. Said rate for employees has been 6.2% since 1990, but in 2011, the rate was temporarily reduced to 4.2% per year. Each time you receive a paycheck, your employer deducts the determined OASDI percentage from your gross pay. The OASDI tax rate does not change based on your marital status or increase as you earn more money, just like income tax.



Only your income is subject to OASDI deductions, so you don’t have to pay income tax, such as interest or dividends. Also, the federal government collects OASDI tax only on a certain amount of money each year. For example, in 2011, your employer can deduct a maximum of US $ 106,800 for OASDI, that is, the maximum OASDI that must pay for the year, at a rate of 4.2%, is equal to US $ 4,485.60.


Employer pays, too

When your employer takes money from your paycheck for OASDI, it also makes a payment on your behalf. Generally, you pay the same rate as the employee, but in 2011, the federal government reduced only the employee rate to 4.2% and left the employer rate at 6.2%. Like the portion you have paid, your employer’s portion of the OASDI tax is also limited to the same amount of income.


Claim of excess OASDI deductions

If you work for multiple employers and your income exceeds the annual OASDI limit, you may have too much money withheld from your paychecks. For example, if one employer pays you $ 70,000 and another $ 80,000, the total exceeds the 2011 limit of $ 106,800, and if employers withhold OASDI on all of your earnings, you will have too much withheld. When you file your tax return, report the excess on line 69 of Form 1040, and the total taxes paid will be credited to you.

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