Featured in Sharia Portfolio’s Newsletter, these are 20 Questions on Zakat which I wrote as a quick and easy guide to understanding Zakat.
Be sure to get a copy of my book “Simple Zakat Guide” which has all this information and more, plus calculation formulas and worksheets.
Easily find all my articles, videos, and courses about Zakat on the Zakat Page.
1. Who has to pay Zakat?
Zakat is due on the wealth of any Muslim, young or old, male or female, that is held in savings for one calendar year and is more than the Nisab.
Example: If both you and your children have separate savings of 1000 dollars or more for one year, you must pay the Zakat on both accounts, not just yours. $25 for your savings, and $25 for your child’s.
2. What forms of wealth are liable for Zakat?
The following are liable for Zakat:
- Gold & Silver
- Paper currency held in cash or in the bank
- Tradable assets owned by your business
- Crops and herded animals.
3. How do I know when I have to pay Zakat?
Calculate your balance sheet, on-hand savings, various current accounts, and marketable securities. If the total is more than the Nisab for an entire year at any given month, you must pay Zakat on it.
Example: You see that your bank account shows a balance of 1500 USD from Ramadan of last year until Ramadan of this year. You pay 2.5% on 1500 = $37.50 USD.
4. How can I find out what the Nisab is so I know if I owe Zakat or not?
One of the best websites is called www.e-Nisab.com, check the Nisab for silver in USD. For calculating cash, savings, and tradable assets, the Nisab for SILVER is always used, not the one for gold.
5. So now that I know the Nisab and I know that I’ve had saving for a year more than that amount, how do I calculate my Zakat?
Follow these steps:
- You take your current savings, all cash in hand, any tradable business inventory you have, and the value of any active investments and marketable securities you have and add them together. Lets say that gives you 10,000 USD.
- Deduct any immediate liabilities such as this months mortgage payment, your other bills, payroll (if you have a business), insurance payments, etc. Lets say that equals 3,000 USD.
- Subtract your immediate liabilities from your current assets, 10,000 – 3,000 = 7,000 USD.
- Calculate zakat: 2.5% x 7,000 USD = 175.00 USD is due for Zakat.
6. Someone owes me money do I have to pay Zakat on that amount?
If you can collect at any time (i.e. it is good debt) then yes you must calculate that into your zakat as above. If they are refusing to pay (i.e. it is bad debt) or are they are unable to pay you because of financial distress, then no you do not pay it at this time.
7. What do I do once I collect that debt?
- If it is more that the Nisab and has been owed for more than a year, you pay zakat for one year only once you collect.
- If it is less than the Nisab, then you add that money to your savings and what for the next time you pay zakat.
8. Do I have to pay Zakat on my 401k plan or my IRA?
You do not pay Zakat on your 401k, your IRA, or any account to which you do not have access until you cash out without penalty. At that time you pay Zakat for one year. Read more on the Zakat Page.
9. Do I have to pay Zakat on my personal assets such as my home and car? What about my capital assets like my copier machine, offices, company car, etc.?
You do not have to pay Zakat on any personal assets or capital assets. Zakat is only due on surplus wealth that is over the Nisab for a year or more.
10. Who can I pay my Zakat to?
Zakat is to be given to eight categories of people designated in the Surah Taubah 9:60: (1) The destitute, (2) The poor, (3) those collecting and distributing Zakat, (4) those whose hearts need softening, (5) in manumission, (6) in paying off debts, (7) in Gods path, (8) and helping the travelling who are stranded. Read more on the Zakat Page.
11. Can a man pay his Zakat to his wife? Can a wife pay her zakat to her husband? What about the rest of my relatives?
A man cannot pay zakat to his wife, because he is obligated to provide for your wife; anyone you are obligated to maintain financially then you may not give them your Zakat. This includes your wife, your children, and your parents. Your siblings, cousins, Uncles and aunts can receive your Zakat. Your wife however is not obligated to maintain you financially, she may give your from her Zakat ONLY if you are needy and included in one of the above eight categories.
12. Instead of paying my Zakat here in the United States, can I send my zakat overseas?
You may not send your Zakat anywhere outside your locality until you are certain that there is absolutely no need for it. You are obligated to give back to the locality you live in before you take that money elsewhere. The only exception to this is if you are sending money to your family members.
13. I have Gold and silver jewelry, do I have to pay Zakat on it?
Yes, you must pay Zakat on it, regardless of whether it is for adornment/decoration, you wear it or not, or if it was inherited. ANY gold or silver you have, if it more than Nisab, Zakat must be paid on it. Read more on the Zakat Page.
14. What is the Nisab for Gold and Silver?
If you have 95 grams of gold or more, then you are liable to pay Zakat on that gold. If you have 595 grams of silver or more, then you are liable to pay Zakat on that silver. Check www.e-Nisab.com for the cash value of the Nisab.
15. I know that my earnings and savings will be the same for the next couple of years can I pay my Zakat for next in advance?
Yes, you may pay your zakat for next year in advance along with this year. However, if your earnings and savings change so that you owe more, you will have to pay the difference later.
16. I have not paid Zakat for years, what do I do now?
You should look back to your balance statements and estimate your liability for the past years, then pay for those years.
17. I want to give my Zakat to an Islamic Center, what should I do?
It is recommended you give your Zakat to organizations that you are sure will spend it on the eight categories mentioned above. If you do give it to an Islamic Center, be sure that your local Islamic Center differentiates between general funds (or Sadaqah) and Zakat funds.
18. Can I give zakat for the building, for toilets, etc?
Zakat is only to be used for the eight categories listed above. All other projects should be paid for from generous donations not associated with Zakat.
19. What is Zakat-al-Fitr?
Zakat-al-Fitr is paid in expiation for the sins and mistakes we commit during Ramadan. It is paid as 2.5 kilos or 5 pounds of wheat, dates, rice, etc. You may pay the cash value of rice if you like. The cash value this year $10.00 is per person. Your Islamic Center will act as your agent in distributing to the poor. See the mini-course on the Zakat Page
20. I want to pay for Zakat-al-Fitr. Can I write a check to my local Islamic Center? How much do I pay?
Yes, if your local Islamic Center will act as your agent in distributing your Zakat al-Fitr locally. When you write a check, specify Zakat al-Fitr in the memo. You must pay for every member of your family.
Example: You, your spouse, and 3 children make 5 people. Multiply 5 x 10.00 = 50.00 zakat al fitr.
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