What are OASDI taxes? They help fund your retirement
(NewsNation) — You may have noticed some alphabet soup on your pay stub, with the acronyms FICA and OASDI. But what are they, and how do they affect your bottom line?
FICA stands for the Federal Insurance Contributions Act and reflects the federal payroll taxes deducted from your earnings. Specifically, workers pay into Medicare and OASDI, or Old-Age, Survivors, and Disability Insurance (more commonly known as Social Security).
Filing taxes late will cost you, but how much?
If you work full-time for a company, you pay 6.2% for OASDI and your employer matches that amount. If you're self-employed and make more than $400, you are on the hook for the entire 12.4%.
After paying in, workers ultimately draw Social Security benefits when they retire. Some individuals may be eligible to draw benefits for a disability.
There is a notable exception to Social Security taxes. Public employees with qualifying pensions are not subject to OASDI because they will draw retirement income from their own systems.
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