How to Determine and Calculate OASDI Taxable Wages

The old age, survivors and disability insurance tax, or OASDI, also called the Social Security tax, is withheld by employers on behalf of their employees. The tax only applies to earned income, such as wages and salaries, rather than unearned income such as investment income or pensions. The federal government also limits how much of your earned income is affected by the OASDI tax. As of 2011, the OASDI tax only applies to the first $106,800 of earned income, but this amount is adjusted annually for inflation.

Step 1

Add the gross amount of your most recent paycheck to any paychecks previously received for the year. The gross amount of the paycheck means the amount before any taxes are taken out. For example, if you had previously earned $106,000 and then earned another $3,000, your new total equals $109,000.

Step 2

Compare the total to the annual limit on income subject to the OASDI tax. If your total is smaller than the limit, the entire amount is subject to the OASDI tax. If it is larger, continue to the next step.

Step 3

Subtract the OASDI limit from your total if the total is greater than the limit. This is the amount of your paycheck not subject to OASDI taxes. In this example, subtract $106,800 from $109,000 to find that $2,200 of your last paycheck is not subject to OASDI taxes.

Step 4

Subtract the amount not subject to OASDI taxes from your last paycheck to find the portion of the paycheck subject to OASDI taxes. In this example, subtract $2,200 from $3,000 to find that only $800 of your last paycheck is subject to OASDI taxes.

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