What is Fed OASDI-EE on a Paycheck?
The deduction labeled OASDI/EE on your paycheck stands for Old-Age, Survivors, and Disability Insurance/Employee proportion. Its the required contribution you make toward your federal Social Security account. Your employer makes a matching contribution. For the 2009 calendar year, the tax applies to your earnings up to a limit of $106,800. You pay 6.2 percent (the deduction you observe on your paycheck), and your employer pays 6.2 percent, for a total of 12.4 percent.
Employers usually are required to ensure withholdings from your paycheck. Definitely, that box labeled federal income tax is not a mystery. If you observe a box labeled OASDI/EE, you most likely notice another labeled HI or several other name for the Medicare hospital insurance part of Social Security. In addition to OASDI, you and your employer are each required in 2009 to pay 1.45 percent of all your earnings (no limitation) for Medicare, a total of 2.9 percent. Both of these withholdings are required by the Federal Insurance Contributions Act (FICA). If you have worked in other places, your employer may have referred to them by various names on your paycheck—just like, FICA-OASDI and FICA-HI, or simply Soc Sec and Medicare.
The Social Security Administrations website offers a detailed history of this social insurance program, signed into law in 1935 by President Franklin D. Roosevelt. At first, it supplied a continuing income just for retired workers 65 or older. Later amendments additional benefits for spouses and minor children of retired workers, for survivors of covered workers dying prematurely and for the disabled. additional in 1965, Medicare supplied health insurance for almost all 65 years of age or older. The 1935 law included original provisions for Social Security taxes. Nevertheless, in 1939, the taxing provisions were taken out of the Social Security law and put in the Internal Revenue Code, in the section we call FICA.
If you are an employee as the Internal Revenue sets defines employee, then you and your employer are required to pay OASDI and HI taxes on your earnings. The IRS says Generally, a worker who performs sets for you is your employee if you have the right to control what will be done and how it will be done. IRS Publication 15-A Employers Supplemental Tax Guide (Resources) provides much more definition. observe: Although virtually all employees are required to pay OASDI taxes, one group is exempt—students that are enrolled half-time or more at a university and also working part time for that university.
Have you wondered what your employer does with the OASDI and other amounts withheld from your paycheck or paid in your behalf? Usually, the amounts must be regularly transmitted to the IRS throughout the year. The schedule of payment varies according to the size of the business—semiweekly or monthly. Payments are made by the Electronic Federal Tax Payment System (EFTPS), by check or place in an approved financial institution.
OASDI applies just to the first $106,800 of a persons earnings in a calendar year. For example, if your earnings have reached a total of $106,800 by Sept. 30, you do not have to pay Social Security tax on your further earnings by Dec. 31. The majority of employers automatically stop deducting OASDI when an employees earnings reach the control during the year. (Check to make sure, though.) If you work for more than one employer or have changed jobs mid-year, also verify to notice if your combined earnings from all employers go beyond the limit. In that case, you can claim a refund of the excess OASDI paid on your federal tax return. observe: There is no similar limitation on Medicare tax.