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234 questions answered by Sh. Mustafa Umar. Search in your own words or pick a topic.
Do I have to pay Zakah on gold and silver jewelry?
If the gold and silver jewelry is for resale or is used as an investment and never worn, then you must pay Zakah on it every year. If the jewelry is worn regularly, then you do not have to pay Zakah on it (but it is better to do so anyways because scholars differ and because it helps the poor).
Do I get more reward for paying Zakah in Ramadan?
No, because it is due after one lunar year and that timing varies for people. So it would be unfair for whoever has Zakah due outside Ramadan.
Can I spread out Zakah payments over time?
No, because Zakah is due on a specific day, and delaying it would be sinful, just like delaying prayer. However, you can pay earlier so all your Zakah is paid by your due date.
Can I subtract the amount I owe in taxes when calculating Zakah?
Yes, if your taxes have not been paid yet and you know exactly how much they will be. The general principle is that the calendar tax year is Jan 1st to Dec 31st and you have about four months to pay it. If you have not paid your taxes yet, it can be deducted from your Zakah calculation as a debt you owe, but if you have paid your taxes then it cannot be deducted.
If I am gifted a large amount of money right before my Zakah is due, do I pay on it? If I sell my house right before my Zakah is due and I plan to quickly buy another one, do I pay on it?
Normally, you must pay on whatever money you have on your Zakah due date, whether you have had that for a few days or a few years. However, if you know you will not have this money for a long time and it just temporarily came into your possession, then you do not have to pay Zakah on it.
Do I pay Zakah on employee stock or stock options? Does it matter if they are vested, qualified, or restricted?
You do not have a right to unvested employee stock so there is no Zakah on that. Vested employee stock options cannot be sold so there is no Zakah on them until you exercise the option and get the actual shares. Vested (restricted or unrestricted) stock from an employer is similar to shares that you purchase in the market, so Zakah is due on them.
Can I pay some of my Zakah early?
Yes, but make sure to pay the entire amount you would have owed on your due date. For example, if you give $100 as Zakah six months early, and then on your Zakah due date you have $9,900, you must add back the $100 and calculate your Zakah on 2.5% of $10,000. You now owe the remaining $150 in Zakah.
Do I pay Zakah on undistributed inheritance or life insurance if it is stuck in litigation?
No, because ownership and possession of wealth is a prerequisite to Zakah being due. This money is in limbo and belongs to no one, so it is not analogous to a loan.
Do I pay Zakah on the purchase price, market value, or future selling price of merchandise and investments such as stocks?
You must pay Zakah on the current market value of merchandise or investments every year because that is your current Zakatable net worth at the time.
Do I pay Zakah on my 401K or retirement account if I can’t access the money until I retire?
Yes, you must pay Zakah on the money in your retirement account since it completely belongs to you, you freely chose to invest the money, and you have incidental access to it if needed.
Can I give Zakah to a poor non-Muslim?
No. Zakah is a specific amount only collected from Muslims and given to Muslims. However, non-Muslims in need should be helped through general charity [ṣadaqah].
Should I give Zakah to specific people over others? Can I give Zakah to a family member (Syed/Sayyid) of the Prophet Muhammad?
You should first distribute Zakāh to your relatives [excluding parents and children], regardless of where they live. After that, you should distribute Zakāh locally since it was collected from the same area, unless there is an urgent need elsewhere for it.
Which parts of my business do I pay Zakah on? Do I calculate the retail price, wholesale price, or liquidation price of my merchandise for Zakah?
You must pay Zakāh on merchandise for sale, raw materials, and cash equivalents but not on assets such as machinery, furniture, and buildings. You may calculate the liquidation price since that is what you would actually get if you had to sell off all your products. The price will be determined on the day your Zakah is due.
Is Zakah due on the property I live in or a rental property? Do I pay Zakah on land or a burial plot? Do I pay Zakah on a property that is still under construction?
If the property was primarily purchased to live in or rent out for fixed income, then no. However, if it was primarily purchased to sell it, then Zakāh is due every year on the current market value. If you purchased the land or burial plot for yourself or family to use then no Zakāh is due on it. However, if you purchased it as an investment with the intention to sell it when the value goes up then you must pay Zakāh on the current market value every year. For a property under construction: If you intend to sell the property as soon as it is ready, then yes. Zakah will be due on the current market value, since it resembles a product being manufactured to be sold soon.
Can I give my Zakah to another person or organization to distribute for me?
Yes, you can do that if it is difficult to find Zakāh eligible people yourself. Your Zakah is not considered paid until it reaches the hands of the eligible recipient.
Do I have to pay Zakah on stock shares?
Yes, since shares of joint stock are considered merchandise since they were purchased with the intent to sell them at a greater price. They are to be calculated at their current market value on the day Zakah is due. For example, if I purchase $1,000 of Apple Computer stock with the intention to sell them after a few years when the value increases, I will pay on the market value every year.
Do I have to pay Zakah on money set aside to pay for future expenses such as college, marriage, or a family vacation?
If the money is in your possession when your Zakāh is due, you must pay on it. Having an intention to spend it on a future expense does not exempt it from Zakāh.
How do I calculate Zakah for previous missed years?
Check your old bank statements and records to make an estimate of your total savings each year, starting with the earliest year first.
How should I pay Zakah on an investment I don’t have access to?
Pay it using other money that you have. If you do not have enough money to pay the amount of Zakāh in the investment then keep a record and pay for all the previous years you missed as soon as you either have enough liquid funds or gain access to the investment.
Is Zakah due on a refundable security deposit paid out for renting a property?
If you give someone a security deposit to hold against possible future charges, it is like a loan with a future due date. You will not pay Zakāh on that money, but the holder of the deposit will since they are able to use that money in the meantime.
Can I pay Zakah on a Gregorian date every year instead of using the Islamic calendar?
No, because the Islamic lunar calendar has 354 days in a year while the Gregorian has 365 days, so you would be paying eleven days late every year. Every 32 years you would have skipped an entire year of Zakah payment.
Do I have to pay Zakah on a Certificate of Deposit [CD] account if I cannot access the money?
A certificate of deposit [CD] is like giving the bank a loan on interest and is forbidden. The interest accrued must be given away in charity with no intent of reward, and Zakāh is due on the total amount every year if it exceeds the minimum amount [niṣāb]. It is recommended to pay Zakāh on this money yearly from other liquid funds you own. However, it will technically only become a requirement at maturity when you are able to access the money, and Zakāh must be paid on it for all previous unpaid years.
Do I pay Zakah on money I loaned out?
If you loan money to another person but the debt is not due yet, you will not pay Zakāh on that money, but the debtor will. For example, if Ali loaned $10,000 to Zayd to be paid in one year, Zayd will pay Zakāh on that money since he has no intention to pay back the loan before the due date.
Do I pay Zakah on a debt?
Yes, unless the debt is due now and you are able pay it off immediately. Long term debt like mortgages, car loans, and student loans have a monthly repayment schedule, so they are not currently due. If the current installment of a debt is due now, or if you have unpaid rent or bills that must be paid, they may be subtracted from your wealth in order to determine how much Zakāh you will pay. For example, Khalid’s father loaned him $200,000 to buy a house and he repays him $1,500 every month. He has monthly bills for home internet, cellular phone services, electricity, gas, and water which amount to $200. His monthly loan payment and personal bills were due at the end of his Zakāh cycle, so he may subtract the $1,700 that he is about to pay when calculating Zakāh.
Which family members cannot receive Zakah?
Zakāh cannot be given to your dependents such as your parents [or grandparents], children [or grandchildren], or spouse, since you are responsible for taking care of them. Zakāh may be given to other close relatives such as your brother, sister, uncle, aunt, nephew, niece, or in-laws. In fact, it recommended to give Zakah to your family members if they are poor.
How is Zakāh supposed to be calculated? When exactly is Zakāh due? Can I just pay it on any day I choose?
In order for Zakāh to be required, a person must possess the minimum amount [niṣāb] of productive wealth required to pay it, which is the value of three ounces [or 85 grams] of pure gold [$3,775 on May 19, 2017]. Note that this amount fluctuates with the changing price of gold. A person who owns less than this amount, even if it covers their expenses, is generally not considered to be well off. The current value of gold can be looked up by checking the ‘spot market price’ at any distributor and should be checked on the day Zakāh is due.
Is Zakah due on jewelry?
If jewelry or household decorations are primarily for personal use with no intention of investment or financial security, then you don’t need to pay Zakah on it. However, if it they are considered to be an investment or financial security then Zakah must be paid.
Can I give my Zakah to build a well, hospital, or school?
No, because Zakah is only supposed to be given to people, not to objects or institutions. Also, because these projects are usually used by non-poor people as well, who are not eligible to receive Zakah.
These answers are general guidance. For your own situation, ask a scholar.