Zakat question

[جوري]

I didn't know where to stick this, clarification or Aqeedah or miscellaneous, so hopefully a mod can move it to the correct place after clarifications insha'Allah..

My question is:

The percentage of zakat that you give do you calculate it before or after taxes, because then the number can differ significantly.

Let's say for argument's sake you make a nice whole number of $100,000
now are you to calculate your zakat off that number or after the govt. has made their money and say they take half or close to half so you are left with $50,000 .. 4~10% off 100,000 differs significantly from 4~10% off 50,000, so pls tell me which is it..
also do you give money off your gold assets jewelery or whatever, and if you do, do you do it just once or every year?

Jazakoum Allah khyran

[_PakistaN_]

Somthing I want to know aswell....

[جوري]

[Sampharo]

Well first of all if you have any means of avoiding paying of taxes, you may use them because taxes on transactions and income are strictly forbidden in Islam and is considered to be persecution. Consensus of scholars agreed that it is of "Forbidden Mokoos" and can be evaded.

Aside from that, you calculate your zakat after the taxes were paid off, because that money is taken away from you every year and governments consider it a commitment you have to make from the day you made the money, so it does not reside with you as wealth.

However why do you say 4-10% and why are you calculating on your income?

Zakat is paid on your total owned resting net wealth and assets, and is valued at 2.5% of whatever reaches nisab (a minimum amount below which you are considered poor and therefore are not required to pay zakat, I think Hanafi methodology scholars calculate it today as US$161 or something).

What you do is on the day the zakat should be paid, you should calculate your cash that you have on that day (including in saving accounts), take out liabilities and debts, and then include your general assets that has been with you for a year or more. That includes properties, antiques, and gold jewellery yes if it reaches separate Nisab, which is 87 grams or more. You should not include personal property like car, computer, furniture etc. unless they are inventory for business trading. After that pay out 2.5% on the total.

Next year you include all your assets again yes.

That was just a general guideline by the way, there could be special nisab for some of your other property items and such, so it's best to call a scholar from your country and give detailed account of your finances (it's best a local scholar because they would know what local instruments like 401K accounts or such things mean), or you can use this facility to calculate if you have straightforward assets: http://zakat.al-islam.com/eng/

Wa Allah 'AAlam

[جوري]

Jazaka Allah khyran, that is very helpful indeed..
I thought zakat = to 4% of your income... I always have someone (brother or father) manage my finances but I would like to learn to do it myself..

One can give money to charity and have it count as a tax write off, but you still can't avoid taxes by threat of imprisonment.. also I am not sure I understand what you mean by this:

whatever reaches nisab (a minimum amount below which you are considered poor and therefore are not required to pay zakat, I think Hanafi methodology scholars calculate it today as US$161 or something)

I don't understand what nisab means, can we work some hypothetical numbers into this so I can have a clearer understanding insha'Allah?

[Sampharo]

One can give money to charity and have it count as a tax write off, but you still can't avoid taxes by threat of imprisonment.

Did not mean subjecting yourself to danger of course. I understand it is very hard for Americans in the US to reduce or avoid taxes. Outside though it is easy and can be done with appropriate accounting and Trust Fund setup in Tax Havens. Just wanted to bring the knowledge that it is permissible in Islam to avoid it and using clever means to reduce taxes paid.

also I am not sure I understand what you mean by this:

whatever reaches nisab (a minimum amount below which you are considered poor and therefore are not required to pay zakat, I think Hanafi methodology scholars calculate it today as US$161 or something)

Nisab نصاب means a minimum value by which if a certain asset class reaches it, it becomes required to pay Zakat on that asset. For the example I mentioned, 87 grams of Gold is the minimum amount you should have before needing to pay zakat for it. So if you have total jewellery of 70 grams, then you don't need to pay zakat off of it. If you have 120 grams of gold in different items of jewellery, then you'll need to pay 3 grams worth in zakat.

What you should do is generally calculate the value of 87 grams of Gold as per today's prices, and that will be your Nisab. Let's say the value of that is 3191 as per today's gold price of 36.68 per gram.

Now you calculate your assets, let's say you have a house worth 250,000, mortgage worth 150,000, savings account with 20,000 in it, and shares worth 30,000. Then your net worth is 150,000, which is clearly above the Nisab level of 3191. So you'll need to give out US$3,750 being 2.5% of what you own. That is of course based on what have been with you for one full year (Lunar year that is, Hijri year of 354 days) then you calculate the value of those assets and subtract Liabilities to have your net balance.

Let's say your house was actually revalued to US$102,000 after the crisis. Then your net worth is actually $2000. Since you have less than the Nisab amount, you should not pay any Zakat.

The part of $161 was about cash at hand, that Hanafi scholars (only hanafi) are calculating based on silver, not gold. Some say if you have more than that amount ($161) then you should pay zakat, instead of having more than ($3191). But mostly this is now a weak opinion, I mentioned to add knowledge that is all.

By the way if that link that I sent was not working properly, use the following one for simple and general calculation: http://www.central-mosque.com/fiqh/zcalc.htm

This one is a good excel file that is very detailed and you can keep on your computer: http://www.muttaqun.com/zakatcalc.xls

[جوري]

Jazaka Allah khyran.. very helpful indeed..