F.A.Q About Zakat
Answers to common questions related to zakat.
HOW IS ZAKAT FOR CASH ASSETS CALCULATED?
If a person only possesses cash in hand and in their bank and does not have any Jewels, Gold, Silver, a debt they are waiting on or any kind of secondary income (rental, etc.); Zakat is calculated upon the left overs of that possession after the deduction of their yearly expenses and 1/40 or 2.5% is given as Zakat. For the Muslims that reside in the United States, it is befitting that they calculate their Zakat in USD because it is the local currency.
HOW CAN I CALCULATE THE ZAKAT OF TRADE/BUSINESS ITEMS ?
All business/trade goods/items are held accountable for zakat. Fabric, Food, Supermarket/Mall items, Car dealership inventories, Gas stations and etc. can be help accountable for Zakat. If the owner has at least 80 grams of gold or an equivalent to $4400.00 (minimum value of 80 grams of gold) then they are obliged to give Zakat at the end of every year after all income/expenses are accounted for and for whatever is leftover in their inventories.
Example: Inventory value is $100,000 plus other liquid assets which is valued at $10,000 plus another $10,000 for rental income =
Expenses of $50,000 plus an estimated amount of $20,000 for miscellaneous payments =
$120,000-$70,000=$50,000 is the net amount that is accountable for Zakat.
CAN I PAY MY ZAKAT FOR MY BUSINESS/TRADE GOODS FROM ITS OWN TYPE?
After the Zakat is calculated for the items in the inventory, in this example it is $1,250. It is permissible to pay this Zakat from the available inventory; for example $1,250 worth of fabric or food or anything else that has the same value. It is also permissible to pay half of the Zakat from the items/good and half in cash.
HOW DO YOU CALCULATE THE ZAKAT FOR JEWELRY WITH DIFFERENT CARATS?
DO WE HAVE TO CALCULATE AND PAY FOR REAL ESTATE?
Condos, Business Center, Hotel, Land and other Real Estate properties are due for after one year has passed since the date they are operational for business and are generating income that surpasses the Nisab Value.
There are some Fuqaha who claim that properties like Farm and Land that do not generate income are not accountable for Zakat unless they are sold. There are some that claim that they are accountable as long as the intention is to generate business and income.
The best method is to calculate the Zakat over the value of the properties that you own and to pay the Zakat that is due.
Real Estate or any property that has been inherited or gifted are not due for any Zakat unless they generate any type of income (rental, etc.)
IS A REALTOR BOUND TO PAYING ZAKAT FOR PROPERTIES THEY OWN FOR BUSINESS PURPOSES?
A Realtor or Agent is bound to calculate and pay Zakat of any property they have in their possession with the purpose of generating business.
You are not bound to pay Zakat for for owning valuable likes Pearls, Diamonds, Coral or Ornamental Stones. However if you are keeping them in your possession or inventory for business purposes, then they are bound for Zakat. Owning any type of property for business purposes carry the same rule as these mentioned valuables.
HOW DO BUSINESS PARTNERS PAY ZAKAT?
After calculating income and expenses at the end of the year, if the net profit reaches the Nisab value, every partner is responsible for paying their Zakat for their shares. If the person has another source of income as well, that is also added to the value and calculated for Zakat.
ARE STOCKS BOUND FOR ZAKAT?
If a person owns any Stocks for the purpose of investing (buy/sell/trade), they must include the value of the stocks into their income before calculating their assets for Zakat. After that, if it is over the Nisab Value, Zakat is due in the amount of %2.5.
WHAT IS NOT BOUND FOR ZAKAT (LOANS, BELONGINGS, ETC.)?
DO YOU PAY ZAKAT FOR RECEIVABLES (DEBT OWED TO YOU)?
In this case, it is separated into three different categories;
Provable Debt: Money that is given as loans, Debt owed due to business/trades and if the debtee is not bankrupt, and if the loan is redundant with this individual and they are paying on time every year, Zakat is accountable.
Medium Debts: If the debt is debt that is left over from a rental item, left over from a sale of a used item, left over payments from a rental income or redundant loans that are not paid in time; then they are added to the income when they are paid and Zakat is accountable for that amount. Zakat is not due for anything that is left unpaid.
Simple Debts; Any debts that have not been mentioned in the above types, any debt that the loanee declines, any debts that do not have proof or witnesses; these debts are not accountable for Zakat. Whenever the amount is paid back, then the Zakat will be calculated for and paid.
CAN DEBT OWED TO YOU REPLACE ZAKAT?
If a debt given to a poor person or debt given to a charity organization is donated by deducting zakat at the end of the year, zakat will be given only for the amount they will receive. All donated debt will not have replaced zakat.
ARE AGRICULTURAL PRODUCTS SUBJECT TO ZAKAT?
Agricultural products such as wheat, barley, chickpea, walnut, and hazelnut that are obtained only by being watered with rainwater, with the name ushr or one-tenth as in one per ten scales.
Ushr = the duty of giving zakat with the alliance of the whole ulema.
Crops that are carried with animals or watered by hand are subject to one-twentieth ushr=zakat
There are different opinions about whether or not to give ushr in non-durable agricultural products such as vegetables, fruits.
What’s best is the giving of ushr after deducting the cost of raising such products.
IF THE CROP THAT'S USHR IS GIVEN IS NOT DISPOSED OF BUT PRESERVED AND ONE YEAR HAS PASSED, SHOULD THIS CROP NEED ZAKAT AND USHR AGAIN?
If a product is kept for a year by its owners without the intention of trading, and then sold, even if the money obtained meets the quorum, it is not subject to zakat. However, if a year passes by on the amount obtained from the sale, then it is subject to zakat.
If a crop that’s ushr has been given is kept for trading purposes, it becomes subject to zakat after a year.
IS IT REQUIREMENT TO GIVE ZAKAT FROM ILLEGITIMATE EARNINGS?
If by illegitimate earnings purposes such as thievery, extortion and gambling is meant, then zakat is not required and these earnings should be returned to their owners.
However, if haram earnings or belongings are mixed in with halal earnings or belongings, and it is not possible to differentiate between them, then it is required to calculate all of the earnings or belongings and give zakat accordingly.
MY SPOUSE IS IN DEBT; I HAVE GOLD. ARE WE SUBJECTED TO ZAKAT?
Zakat is a personal duty like prayer or fasting. The man’s debt binds the man. If the gold in the hands of the wife is 80 grams, which is the quorum amount, she must give zakat. However, if the debt is in both the husband and wife’s name such as a mortgage, loan or similar common debt, and if the value of the amount of gold the wife owns does not meet the quorum amount after deducting what the wife is subjected to pay for in the common debt, then she is not required to give zakat.
CAN YOU GIVE ZAKAT TO STEP PARENTS AND STEP CHILDREN?
If the stepparents and stepchildren are poor, then zakat can be given to them. They are not considered as the persons family member.
CAN YOU GIVE ZAKAT TO A GROOM OR BRIDE?
The parents of the Bride can give Zakat to the Groom. The parents of the Groom can also give Zakat to the Bride. However if the Bride and the Groom live together with their parents, it is recommended to not give Zakat to them as the Zakat can be used for means of living for themselves (the parents).
CAN YOU GIVE ZAKAT TO YOUR IN-LAWS?
In-laws are not considered of the immediate family, they can be given Zakat if they are poor.
CAN YOU GIVE ZAKAT TO YOUR FOSTER PARENTS?
Foster Parents are not considered of the immediate family, they can be given Zakat if they are poor.
WOULD IT BE CONSIDERED ZAKAT IF A COMPANY GAVE AID TO ITS EMPLOYEES?
It can not be accounted for Zakat due to;
- Uncertainty of if the employee is poor
- The aid was not given in the intention of Zakat
- Uncertainty of if the Company Partners have agreed or not (if applicable)
- If these aids are being given due to a contract clause/requirement
To give the Zakat with the intention of cleaning the heart of everything apart from the love of Allah. To give with the intention of riding the heart of stinginess. To give with the intention of showing gratitude to the blessings from Allah.
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