Have you ever looked at your pay stub and wondered why so much money is deducted?
If you look closely, you’ll notice a slew of acronyms that, without explanation, reduced your take-home pay. One of the most common culprits for most workers is referred to as “OASDI.”
It can be aggravating to have your expected wages reduced, especially if you don’t know why.
That’s why we’re delving into some of your most pressing tax questions and deciphering perplexing terms to make tax season a little less taxing. The OASDI tax is explained in detail below.
What exactly is OASDI?
The Old-Age, Survivors, and Disability Insurance (OASDI) programme is also known as Social Security. Surviving insured workers, retired or disabled workers, and their dependents are eligible for these benefits.
FICA, the taxes that fund Social Security and Medicare, includes OASDI. FICA is an acronym that stands for the Federal Insurance and Contributions Act.
If you work, 6.2% of your pay goes toward OASDI, which is matched by your employer, and is sent to the federal government to help fund Social Security. On your paycheck, it may also be listed as OASDI/EE tax, with the “EE” standing for employee expense.
Self-employed people pay OASDI taxes as well, but at a higher rate of 12.4% because their employer does not match their contribution.
What exactly is the distinction between Social Security and OASDI?
Social Security and OASDI taxes are the same thing. Because it is housed under the Social Security Administration, which distributes Social Security numbers and works with retirement, insurance, and income programmes, OASDI is often referred to as Social Security.