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