Frequently asked Zakat Questions
There are a lot of components to consider when it comes to calculating your Zakat. From combining your assets to figuring out which investments are Zakatable. Here are the most frequently asked questions regarding all things Zakat answered by Zakat expert Shaykh Joe Bradford.
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 or more for one year, you must pay Zakat on both accounts, not just yours. $25 for your savings, and $25 for your child’s.
What forms of wealth are liable for Zakat?
The following are liable for Zakat:
1. Gold & Silver
2. Paper currency held in cash or in the bank
3. Tradable assets owned by your business
4. Crops and herded animals.
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.
How can I find out what the Nisab is so I know if I owe Zakat or not?
The nisab for silver (as of 4/21/2020) is $303.914 USD. For calculating cash, savings, and tradable assets, the Nisab for SILVER is always used, not the one for gold.
So now that I know the Nisab and I know that I’ve had savings for a year more than that amount, how do I calculate my Zakat?
You can use our Zakat calculator to make Zakat calculation quick and easy! Zakat calculation can sometimes get confusing and we don’t want anyone to be unsure about their Zakat.
If you have Zakat related questions you can get them answered by our scholarly partner Joe Bradford.
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 unable to pay you because of financial distress, then you do not pay it at this time.
What do I do once I collect that debt?
If it is more than 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 wait for the next time you pay zakat.
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.
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.
Who can I pay my Zakat to?
Zakat is to be given to eight categories of people designated in 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 God’s path, (8) and helping the travelling who are stranded.
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 his 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 you from her Zakat ONLY if you are needy and included in one of the above eight categories.
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 is more than Nisab, Zakat must be paid on it.
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.
I know that my earnings and savings will be the same for the next couple of years. Can I pay my Zakat for next year 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.
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.
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.
If I have more questions about Zakat, what should I do?
Ask away! You can send your questions to our scholarly partner, Shaykh Joe Bradford.
With so much financial uncertainty during a lockdown, your Zakat can make a global impact this Ramadan. LaunchGood has hundreds of scholar-verified Zakat campaigns. You could help provide food, shelter, and medical aid to displaced people of Idlib, basic necessities to those affected by COVID-19 in your local community, or a safe haven for special needs children in Afghanistan.
