How to Calculate the Amount of OASDI Taxes to Withhold

by Mark Kennan

OASDI stands for old age, survivor and disability insurance, also known as Social Security. The Social Security tax applies to all earned income up to the annual limit. Each year, the annual limit adjusts for inflation, and as of 2011, is $106,800. Unless your income exceeds the annual limit, you must have OASDI taxes withheld. If you work as an employee, you only have to worry about the employee portion. However, if you are self-employed, you also have to pay the employer portion out of your paycheck.

Look up the employee OASDI tax rate on the Social Security administration website. If you are self-employed, also look up the employer rate. In 2011, the employee rate equals 4.2 percent and the employer rate equals 6.2 percent.

Add the employee rate to the employee rate if you are self-employed. In this example, add 4.2 percent to 6.2 percent to get 10.4 percent.

Divide your OASDI rate by 100 to convert to a decimal. In 2011, if you are an employee, divide 4.2 by 100 to get 0.042. If you are self-employed, divide 10.4 by 100 to get 0.104.

Multiply your OASDI rate by your paycheck to calculate the amount of OASDI taxes to withhold. Continuing the example, if you have a $3,300 paycheck and are an employee, multiply $3,300 by 0.042 to find you need $138.60 withheld for taxes. If you have that same paycheck but are self-employed, you need to have $343.20 withheld.

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