Determination

OASDI/EE on a pay stub means Old-Age, Survivors, and Disability Insurance/Employee share. It counts as tax withheld because the employer is required to deduct it from the employee’s wages. The current OASDI withholding on the employee’s pay stub represents her Social Security deduction for the pay period for which she was last paid. Her year-to-date withholding stands for her deduction thus far for the year. The OASDI/EE data on her last pay stub for the year should match her W-2 form, which shows her wages paid and taxes withheld for the year. She uses the W-2 to file her tax return with the Internal Revenue Service, and if applicable, state and local entities.

Purpose

The employer files the employee’s W-2 with the Social Security Administration (SSA). The SSA obtains the employee’s Social Security wages subject to OASDI tax and taxes paid from the W-2. The Social Security Administration also forwards the W-2 to the IRS. The administration puts each employee’s OASDI taxes withheld into a trust fund used to provide monthly benefits to retirees and their families, surviving children and spouses of deceased workers, and the disabled and their families.

Calculation

In 2011, the employee’s share of OASDI tax is 4.2 percent of gross income, up to $106,800 for the year; the employer pays 6.2 percent. Self-employed individuals are not subject to tax withholding, but are required to pay Social Security tax at the full rate of 10.4 percent for 2011.

Considerations

The employer may use different abbreviations to show Social Security or OASDI tax withheld, such as OASDI, SS, SSWT or FICA. The Federal Insurance Contributions Act is the law that mandates the collection of Social Security tax, hence FICA. While employees may be subject to zero federal income tax withholding – which depends on their filing status and allowances – they usually must pay Social Security tax.