By CPA SAM
What Are These Taxes?
Q. I just started as a temp through an agency. I work full-time and just received my first paycheck. I want to ask about the OASDI and the NY 2010-NYCNY withholdings. I was taxed heavily for the OASDI. What is the NYCNY withholding? Most importantly, I wanted to ask you is there any way to check whether I had overpaid for taxes in a paycheck?
A. The items that came out of your check look completely appropriate. The most common questions from employees to payroll departments about paychecks come from the cryptic descriptions of deductions shown on the paystub. In your case, OASDI is the abbreviation for “Old age, survivors, and disability insurance.” This is the official name for Social Security. It is calculated as 6.2% of taxable wages up to a maximum of $106,800. This means, you can pay up to $6,621.60 this year towards this tax. Your employer(s) will also match 6.2% of your taxable wages. For lower income individuals, this tax can be the highest amount taken from the paycheck. There is another tax that is closely associated with this called Medicare. It is 1.45% of all taxable wages.
NYCNY looks like New York City Tax. All residents of New York City get to pay an extra tax. Rates on this tax range from 1.9 to 4% depending on your level of income.
As for your last question, there are only three ways to determine the correct amount of withholding. First, you download withholding formulas from each jurisdiction in which you owe tax and run hand calculations to see what is correct. Since that is time consuming and too difficult for most of us, I recommend the second method. PaycheckCity.com has a free Salary Calculator that calculates all your taxes for you using the formulas from each jurisdiction. You simply need to know what settings are on the W-4 Form you gave to the payroll department.
Most importantly, if you have specific questions about your paycheck, your payroll department should be able to assist you as long as you are not asking for tax advice.
Q.