Scenario 2: A portion of earnings to date and current earnings, when combined, exceed the wage cap. Sydney, OASDI Example 2, has earnings to date of $136,500 and current wages of $4,000. To determine how much of her current earnings will be subject to OASDI, add earnings to date and current wages, $136,500 + $4,000 = $140,500. Then subtract from this the OASDI cap, $140,500 - $137,700 = $2,800. This amount exceeds the OASDI cap and is not subject to tax. To determine the amount to tax, begin with current wages and subtract the amount that exceeds the cap ($4,000 - $2,800 = $1,200). This amount ($1,200) of current earnings is under the cap and taxed at the OASDI rate of 6.2% or $74.40.

Tackle It Note: Round to the nearest cent. Michael Jordan has earned to date $132,000 and has current earnings of $7,260.00.

Employee: Jordan, Michael Earnings to Date: =$132,000.00

Current Earnings: =$7,260.00

OASDI Withholding: =$