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Zakat (alms tax)

Do I calculate my zakat by my entire earnings or what I have left after I pay my bills?

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Do I calculate my zakat by my entire earnings or what I have left after I pay my bills?

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Written by Adibudeen
Friday, 15 July 2005
First we need a description of what zakat is. Zakat is a taxable property that is collected from the Muslims and distributed to the less fortunate. The following conditions are necessary for zakat on property: 1. Sanity and Adulthood. 2. Commplete ownership (i.e. it does not include rentals or debt). 3. A lunar year of uninterrupted possession 4. The posession of a certain minimum (nisab) amount. Nisab of gold is 20 mithqal (4.8 grams) and silver is 200 dirhams (2.52 grams). The rate of zakat on them is 2.5%. As of 6/15/2004 nisab was estimated at about $1157.70. What that means is that one must posess this amount in wealth for a full year above his/her expenses in order to owe zakat. If, for example, you make $2,000 per month and spend $1,400 on expenses, you are not subject to zakat because you will never have nisab for a full year. The schools of thought differ on whether or not paper money is zakatable. According to the 4 sunni schools, it is. According to the Shi'a Imami school, paper money is subject to khums (1/5 of surplus wealth). Either way, the same rule applies. You cannot be taxed for money that you do not keep for one full year. You can start your calculation at anytime during the year. If we were in an Islamic state, there would probably be a fixed time of year. Since there is not, you can start whenever you'd like. Scholars also differ on whether or not gold jewelry is subject to zakat. You'll need to check with a scholar that you follow. Whether or not you currently hold a job should have no bearing on whether or not you need to pay zakat. Zakat is not based on income, but rather based on wealth. A working person may make a steady income, but might have to spend it all on his/her family and expenses. On the other hand, a person might not work at all but might be wealthy and therefore need to pay zakat.