Mustafa Umar – Islamic Law Fiqh 101 Essentials Of Islamic Practice #9
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The speakers explain the importance of Zorn, a wealth distribution program, and how it can be utilized for personal and business purposes. They stress the importance of using Zorn to calculate Zorn's value, including the gold standard and silver standard. The speakers advise the customer to pay attention to their jewelry and business assets, avoid paying extra for their gold certification, pay attention to their jewelry and business assets, and avoid Zorn. They also emphasize the importance of using Zorn to calculate Zorn's value, including the gold standard and silver standard.
AI: Summary ©
So today we're gonna be covering
very important topic.
Of course, all the topics have been important,
but this is one of the pillars of
Islam,
very important to know, and that is Zakah,
something which many Muslims are not too familiar
with. So let's talk about Zakah.
Everyone has heard of Zakah, but not everyone
knows the details regarding
Zakah. So what is Zakah? Zakah? The detailed
definition of it is it's a specific form
of charity,
specific type of charity,
that Muslims
must give its obligation,
to certain individuals
who are in need.
So it's not a general type of charity.
It's not just charity. It's a specific form
of charity that Muslims need to give to
certain individuals only who who have it, who
meet certain criteria,
and they're they're in certain type of need.
K. So zakkah is only due on certain
types of assets,
which generally have the potential to increase in
value over time.
It's a very important definition to keep in
mind. It's only on certain assets, certain things
you own,
which generally
have the potential to increase in value over
time.
Right? And you have the intention to kind
of get them to increase in value. So
we're gonna talk about how that that that
excludes your personal possessions. It excludes your watch,
it excludes your cell phone, it excludes your
car,
because
those things you're not investing in them. You
have them for your own personal use, but
you're not trying to make some kind of
profit out of them.
So this is generally the definition of what
Zakkah is, but let's take a look at
the benefits of Zakkah.
Zakkah
helps the person who's actually paying
to purify
their nafs, their ego.
It helps them to purify their ego from
greed because people get very greedy and they
wanna hoard all of their money and they
don't wanna give.
And Zakat
comes and gives this mandatory you have to
give this much money so that you start
getting used to giving in charity and you
can't just hoard all your wealth. You realize
that you're not fully independent and you get
to keep all of your money. You have
to purify yourself from that greed that many
people have. They wanna just have everything themselves.
So that's one of the things that it
helps you with. The second thing that it
helps you with, it blesses your property.
So it puts blessing in your property, which
otherwise
you may not be able to
get much out of that wealth. And blessing
in a property basically means how much,
how much use and benefit you're gonna get
out of that property.
So if you go and you buy,
one person goes and buys a $10,000
car, and another person goes and buys a
$100,000
car, and a $100,000 car keeps on having
problems all the time. It's a lemon. Keeps
on breaking down. It has this problem. It
has this problem. It has that problem.
There's not much blessing in that $100,000
that you spent on that car. Even though
it's supposed to do all of these things,
you got a bad one. You got stuck
with something.
Right? Same thing with going and buying a
house. Same thing with going and buying something.
So this property that you use when it's
when you give Zakah, it blesses the property
in the sense that it's gonna have more
benefit even if it's of a smaller quantity.
So that 97.5%
that's remaining after you pay your 2 and
a half percent zakah has more benefit in
your life
than if you kept the 100%,
and you started spending that for your own
personal needs or whatever it is.
So that's another benefit of Zakah. And another
the third benefit of Zakah is it really
it accustoms people into giving charity on a
regular basis. Remember, charity
Zakah is not equivalent to charity.
I really, really wanna emphasize this point. Zakah
and charity are not the same.
Zakah is a specific subset
form of charity, but charity is just you
give to anyone who's in need. You put
money in the donation box of the masjid.
You go and you,
give to some charitable cause. Someone has,
you know,
medical bills or something, you go and you
help them.
That's charity.
Zakat is a very specific form of charity,
which is not equated to charity. It has
a lot of rules and a lot of
restrictions. So that's very, very important that you
understand. So what Zakah will do, it's like
this bare minimum where you have to give.
Charity, you don't have to give. You're a
good Muslim if you give charity,
but you don't have to. Zakah, you absolutely
have to and you have to know what
you're giving. So the goal of Zakah is
that when you give this Zakah,
you give this mandatory charity,
it's supposed to get you into the habit
of becoming a charitable person
such that you start giving the other charity
as well. This is zakah,
someone who only gives zakah and does not
give any charity,
is basically Islamically considered a miser,
because they've literally given just the bare minimum
that's absolutely mandatory for them, but they didn't
learn to give a little bit more on
top of that throughout the year. So this
is what's the difference between Zakah and the
difference in charity. So it helps people learn
to give charity.
You already gave this much in Zakah.
You survived.
You're okay. You can still buy, you know,
your watch, and you can still live your
life throughout the year.
You could give a little bit more and
you'd be okay. People, the reason why they
don't give, they're so afraid. They're gonna become
poor if they give some of their money
away or something. It helps you. Once you
learn to give a little, then you start
saying, hey. This wasn't this wasn't so bad.
This is not so difficult. It's like exercising
almost. Once you start to go to the
gym a few times,
this is not as bad as I thought
it would. I could do this a few
more times. This is exactly what the purpose
behind zakat is. And also,
it helps a person to be thankful for
the blessings that they've been given.
You thank Allah for the blessings that you've
been given. All that money that you have,
you look at, if you pay 2 and
a half percent, you still have 97 and
a half percent of your wealth remaining after
you pay your zakah.
That's a lot of wealth. People didn't even
have that small amount that you paid. Look
how much more you have sitting in your
bank account. You have a lot of money
and you have to you have to be
thankful to Allah for that. And part of
the way of thanking Allah is to give
to other people who are in need.
So
zakah,
doesn't only help the person who's giving,
it helps the person who's receiving zakah. But
not only not only financially.
It also helps the person who's receiving the
zakah, person who's in need, by spiritually as
well. So it helps them what? It helps
them to purify their ego,
to purify their nafs.
Right? From what? Well, there's this envy that
a lot of people who are in need
have against the rich. They had this hatred
towards people who are who are wealthy
and almost like animosity against them.
And what they will do, it will get
them to understand
that these people are going and giving
back to society. They're giving they're redistributing some
of their, you know, property back, and they're
not just hoarding it themselves. Whatever they earn,
they earn, but they're giving some back into
the community so that the people who are
receiving sakah, they're not gonna have this hatred
anymore.
Even if they're in a difficult circumstance or
something, they're gonna say, you know what? That
money's coming back to me, part of it,
when I when I'm in bad circumstance. And
this person might be in bad circumstances as
well, and they'll get it for them as
well. So the institution of zakah
helps even the people who are in need
to not only just cover their necessities,
but to remove some of that hatred and
that anger that they have. And if you
look at it, it's interesting. If you look
at, recent philosophies
like communism that was developed by Karl Marx,
if you read his Das Kapital, you read
Communist Manifesto, you read some of the other
socialist literature out there, you find that what
one of the things that they were focusing
on is there's this hatred
from the from the poor or the proletariat
or the working class against the wealthy because
they're not redistributing back. And this, according to
him, is the cause of of all the
wars. Probably, yes, exaggerated.
But it's a cause of many wars because
there's this jealousy and hatred between the rich
and poor. There's a battle. Even in America,
we see there's a battle between the left
wing and the right wing between, you know,
the the Liberals and between the Conservatives. And
a lot of it has to do with
wealth. A lot of the issues have to
do with money.
So one one of the things that Zakat
does, it helps to circulate
and balance out,
this wealth among people so that that hostility
is not there. So there's spiritual benefits
as well that people have for the givers
as well as for the receivers.
And it helps to bridge the gap between
rich and poor in the community.
It allows wealth to circulate within a society,
and that's very important rather than just being
hoarded by a few people. So now I
want you to think about this.
I'm gonna explain to you what the rate
of zakha is. Generally, it's 2 a half
percent, but this is very important to understand.
People are not supposed to hoard up their
money and just leave it in, like, you
know, a a a a treasury box or
under the pillow or under the bed or
something like that. If you ever grew up
watching this cartoon called DuckTales,
you you you know this Scrooge McDuck, he
sits there swimming around in his golden, you
know, vault with all this coins and all
this money and all of that. You're not
supposed to do that. Why? Because that actually
messes up society. It hurts society
because it concentrates wealth into the hands of
a few. It doesn't allow any of the
wealth even to circulate within society.
When wealth had a real value, it wasn't
able to circulate. Of course, money has no
real value anymore,
unfortunately.
But when it did, it was actually very
problematic
when people hoard money. So this is important.
So what a Muslim from a Muslim perspective,
a Muslim is supposed to do what? If
you don't hoard your wealth and save it
up, then you're gonna be doing what? You're
gonna be investing, and it's very important to
learn to invest your wealth because Zakat is
not supposed to deplete your savings.
That's a misconception that some people may have.
You say, well, if I have to pay
on my savings that I have, that's gonna
just deplete my savings 2 a half percent
every single year, and I'm just gonna keep
getting lower and lower. And you say, that's
not the point. The point actually is rather
than keeping your savings
in the savings thing, and it's not doing
anything, it's just sitting there, your goal is
to invest
intelligently
in something where you're trying to make more
money off of the capital that you have,
and you wanna at least at least
make more than 2 and a half percent
per
year. Why? Because the Zakat you're gonna be
paying is 2a half percent.
So once you break 2a half percent in
profit in some investment that you have, you
can pay your Zakat through the profit rather
than through the capital that you have, so
it's not depleting it at all. And that's
the goal. But when you invest
when you invest
something in society rather than hoarding and then
keeping in the bank, you're actually doing what?
You're supporting this community. You're allowing wealth to
go through the community. So other people are
getting jobs. Other people are doing other types
of work. It actually helps the entire economy
rather than just sitting on your money because
you have it and you keep it in
the bank. So it's very important to understand
the wisdom behind zakah.
There's so many different wisdoms there. And the
last thing it does, the benefit that it
has, is that it gives people who are
less fortunate the opportunity to participate in society.
People who are kind of down on their,
as they say, down on their luck, meaning
they're they're just certain circumstances have come their
way and they're being tested by Allah
that usually they end up living in some
isolated quarter or, you know, skid row or
living in a a homeless shelter or something
like that. It's people who are going through
some time right now that Zakkiah is gonna
help them just enough so they can kinda
get back on their feet,
and they can come back and be part
and parcel of the community. The goal is
not so that you can leech off of
someone that's just simply paying you because you're
lazy, and I will discuss how that does
zakah prevents that from actually happening.
So the amount of Zakah that is paid
out, it's very we're we're gonna talk about
the amount, but I've already told you 2.5%
is the is the general of what you
pay.
But the amount that's paid, the 2 and
a half percent,
it's usually tantamount to the needs of people
in an average society.
Look at any society across the board, whether
it's a first world country, third world country,
4th world country,
that 2.5%
of wealth redistribution is is enough
to take care of the basic needs of
people.
Alright? And that's really, important because if you
look at modern studies today, some of the
studies have actually shown that if you were
to give zakat in certain developing countries
as well as in first world countries, you
would find that it would completely eradicate poverty
in those regions
where
poverty exists to a large level. And this
is something which has happened in the past.
It has happened in the past during the
time of Umar ibn Khattab, may Allah be
pleased with him. It happened in the time
of Umar ibn Abdul Aziz, when he was
the Khalifa of the Muslim, lands.
It also happened in his time where poverty
was completely eradicated.
They had so much
money left over, they couldn't distribute it to
people because they couldn't find anyone else who
was eligible. Everyone had gotten it because there
was justice prevailing,
justice among 2 groups,
justice among the ones who are paying because
they actually did their job and they paid
it, and justice among the ones who are
distributing zakah, and they made sure that it
was distributed correctly.
So this is something where if you look
at some statistics,
look at the united look at the world
today.
According to,
statistics,
there are 1,426
billionaires in the world today.
There are 1426
people in the world who are worth their
net worth is over a $1,000,000,000.
K? Now that was in 2,013.
Their net worth combined
is $5,400,000,000,000.
5.4,000,000,000,000
US dollars.
If we were to take 2.5%
of their wealth,
their savings that they have, what they're worth,
and you distribute it among the poor, that's
a $135,000,000,000
from just 1400 people
being redistributed back to people who are in
need. And there's statistics from the United Nations
which say that there are a 1000000000 people
in the world that live off of less
than a dollar a day.
So if you were to just redistribute wealth
from those 1400 people,
assume that they were Muslim and they're gonna
be paying their Zakah, then all of a
sudden,
you just took the people who live on
less than a dollar a day, and you've
more than doubled
their daily income.
You've more than doubled their living standard that
they actually have.
So this is just a small example of
how zakah
is actually gonna be beneficial to a community
and to a society.
If you look at
the national wealth of the United States of
America,
It's
$57,400,000,000,000.
That's the national wealth of this country,
and there are about
312,000,000
people in the United States.
Assuming, just hypothetically,
of course, that includes children and all of
that stuff, babies,
Assuming that we were to take that wealth
and redistribute it back to the same amount
of people
at a rate of 2.5%,
it would mean that every single person
would receive $4,600
per year.
If you did the same statistic in Australia,
you would find that it's $9,532
per person,
which is, in most places,
perhaps outside of Orange County and Los Angeles,
most places you could pretty much live a
pretty decent life. Meaning, your your rent payment
is at least gonna be taken care of.
Your electricity and your utilities are generally gonna
be taken care of. You don't need as
that much
left to really survive for the rest of
the year. Your basic your basic needs are
taken care of. Even in a wealthy country
like America or Australia,
let alone the 3rd world countries and the
4th world countries or whatever classification you give
to those countries. So
zakah
being properly distributed, being properly paid, you can
see the wisdom
that it has
in solving the problems of poverty and solving
all of the disparity between the wealthy class
and between the needy class and all of
these things. That's why
Zakah in the Quran has been mentioned at
least
82 times.
82 times again and again gives Zakah gives
Zakah gives Zakah. Zakah is an important thing.
And it's been mentioned side by side with
prayer,
with the conjunction and.
Pray
and give zakah at least 32 times in
the Quran.
Side by side. Why? Because it's trying to
emphasize
prayer and zakat go together.
There are 2 very important things. One of
them fulfills the rights of Allah,
praying.
One of them fulfills
the rights of creation.
So the rights of the creator,
praying. The rights of the creation, giving zakkal
and taking care of other people. That's why
Allah is mentioning them side by side. A
Muslim does not only focus on one aspect
of worship,
not only on social causes and not only
on worship but on both. So this is
something really really important and then Allah gives
a threat as well to those people who
are miserly,
those people who are stingy. And he says
those people who hoard up the treasures
in this life and they don't wanna give
zakah, they don't wanna give charity, they don't
wanna do any of that, Allah is gonna
heat up all of that gold and that
wealth that they have in the fire, and
he's gonna brand them on the day of
judgment
so they can be marked. 1st, you get
burned, and second, you're being marked. You're a
miser. You're a stingy person who wanted to
hold on to all of your wealth. So
zakah is not something we take lightly. It's
something that we should take very very seriously,
which is why we're covering all of these
things in detail.
So moving on to the next point. So
who needs to pay zakat in the first
place? Who's responsible
that they absolutely have to pay zakat?
Well,
the the requirements are quite a few. The
first requirement is you have to be a
Muslim.
So only Muslims you have to identify yourself
as a Muslim. So only Muslims are actually
obligated to pay Zakat. Now, if you live
in an Islamic state,
which
doesn't really exist today,
but if you were living in an Islamic
state, that state would have the authority
to collect the Zakah
if there was some need to do so.
So if you define yourself, you you you
you identify yourself as a Muslim in a
in an Islamic state, they have the ability
and the right to take from your bank
account
2.5%,
from your
business 2.5%
every single year, and make sure that it's
distributed back in Zakkah, assuming that they're a
just
state and they're doing this correctly. Alright.
So that's number 1. So but non Muslims
who are living in Islamic state are not
obligated to pay Zakkah.
So there there can be no way of
taking that wealth from them and saying, yeah,
we're gonna take it from the non Muslims
too. This is only something that's paid by
Muslims
or collected
from Muslims, if you're living in that, region.
But if you don't have a political entity
like an Islamic State,
then what do we do? Well, what ends
up happening is
every single Muslim is left to their own,
that it's their responsibility
to pay out their zakat.
So who do they pay their zakat out
to? Well, they have 2 options.
Option number 1 is you go and you
give it to a poor person or a
needy person who falls in the criteria that
we're gonna be discussing,
or you give it to a regional Muslim
organization that distributes Zakat for you. And there
are several of them. Okay? So these are
some of the things,
you know, the ways that you can actually,
pay out your Zakat, but this is who
it's who it's due on.
Now when we said it's due on Muslims,
what about children?
Right? What about
money or wealth that is owned by children?
Or someone who owns wealth, but they're mentally
handicapped.
They don't have their full, you know, they're
not considered a mature adult, a sane adult.
So in that case,
do we consider them to be eligible for
Zakah or not? Well, Muslim scholars have had
two opinions on this. One opinion is that
the wealth is due on the,
you know, the the Zakah is due on
the person.
The obligation is on the person, and this
was the opinion of the Hanafi school of
thought. In the other schools of thought, they
said, no. The obligation is on the wealth
itself.
So you're still gonna be collecting it even
if it's in the bank account of a
minor.
Even if it's in the bank account or
the savings of a someone who's mentally handicapped
or something like that. Because that wealth has
a a there's a responsibility that this wealth
needs to be distributed to people who are
in need. So these are the two opinions.
What I would recommend is that
there are many reasons why people today
have money
in their children's name.
One of them is because
the parents passed away and they're still young
children,
and usually someone is overseeing that money. So
if that person is overseeing that money
and he's making a lot of profit out
of it, he's hopefully, you're investing it. If
the person is investing it and the money
is accumulating,
then it would be good to pay Zakat
from that. It would be nice if you
did that, because the person's not losing any
money in reality.
The another reason is sometimes people, they say,
well, I'm I'm leaving this much money aside
for my grandchildren's
marriage.
My grandchildren's wedding, I wanna keep $25,000.
I want them to have a really nice
wedding, or I want them to get married,
or something like that.
Technically,
you have to understand, is that money really
in their full possession,
or do you still have some control over
it? That's the first thing you need to
ascertain.
So if you have some control over in
the sense that if all of a sudden
your business goes down, you lose your job,
and now you have no wealth left, would
you be able to pull from that money
or not?
If you would be able to touch that
money, it's not really their money. It's still
it's partially in your control even though it's
put being put in their name. That means
that you would definitely have to pay this
account on that in all forms, in all
cases. But if the money is 100%
belonging to that child and you will have
no access to touch it in any way,
shape, or form,
then in that case,
if you are, you know,
if you're saving money aside for someone like
that, this is not considered, like, some very
important need. This is, like, something that you
just put on the side. Money should be
Zakat should be paid from that side wealth
that's being kept on the side over there.
So we should not really neglect, Zakat when
it comes to even when it comes to
saying, oh, I'm putting it in this account
or I'm putting it in that account or
something like that. So these are the the
two opinions, and of course it's it's nicer
to pay as long as it's not gonna
be hurting that child.
As long as it's not gonna be really
hurting that child.
So,
that's number 1. So category number 1, Muslims
will be paying. Category number 2,
you must fully possess the minimum amount of
productive wealth.
Keep in keep in,
mind the word productive wealth. So like I
said, the assets have to be productive in
the sense that they can, you know, increase
in value over time. So this is what
we call niswab,
and I'm gonna keep using this term throughout
the day, niswab.
So just understand what is niswab. Niswab is
this minimum amount, this threshold
of productive wealth that you possess
that if you have this much money, you
have to pay zakat. If you don't if
you have less than this much money, you
don't have to pay zakat. In fact, you
might be eligible to receive zakat. So this
is what I mean by the minimum amount
amount of productive wealth. It's called a nisab.
So you have to have that, and we're
gonna discuss that very soon. And number 3,
you must possess that nisab, that minimum amount
for an entire year.
And when we say in Islamic vocabulary a
entire year, we mean an entire lunar year.
So keep in mind that the calendar that
we use, the Gregorian calendar, consists of how
many days in a year?
365 days in a year. How many days
in a year are there in the lunar
calendar?
354.
11 days less than that. Right? So we're
talking about if you were to calculate all
the time on the Gregorian calendar, every January
1st, you pay your Zakat, you're short changing
your Zakat payment
11 days every year,
which is short changing in the end of
the day. So make sure you do it
according to the entire year, lunar year, 354
days, unless you're adjusting every time for that
margin of error.
So these are the 3 requirements.
Crime and number 1, you gotta be a
Muslim.
If you're a Muslim
and
whether or not you're, mature or not mature,
that's a debate. Number 2, you gotta have
this minimum threshold. And number 3, you have
to have that for an entire year.
You have to have it for an entire
year. So these are the three things. If
you have if you meet these three requirements,
you gotta pay it's a cap. So let's
take a look at some of these things
in more detail. So
what
what types of wealth is Zakat due on?
What are the types of wealth that you
actually have to pay it on? Well,
we're talking about items that will normally possess
the potential
of increasing in value
over time. What this is what we call
zakatable
wealth.
K. So the word zakatable has been introduced
into the English language
by Muslim scholars, and they say, this is
zakatabal, meaning you gotta pay zakah on it,
and this is not zakatabal, meaning it doesn't
qualify for zakah. So we're gonna use this
terminology.
So what is zakatabal wealth?
Zakatibil wealth includes currency,
any type of money that you have, gold
and silver,
real estate,
business assets,
agricultural
products,
and livestock.
If you're in farming business or something like
that, even certain animals that you have.
Any items outside of this which are for
personal use, for example, something you're using just
for yourself,
it's not considered
productive wealth because you're utilizing it yourself. You
you have no intention to, you know, make
a profit out of it because you're primarily
using it. As soon as you stop using
it and you decide you're gonna sell it,
so you're using your phone every day, as
soon as you decide, you know what? I
don't want this phone anymore. I wanna sell
this phone on Craigslist.
The moment you post it, now it's not
a personal item that you're using anymore. It's
something you're selling. So there, it becomes acceptable.
When it's for personal use again, you see
you cancel the ad and you say, you
know what? I don't wanna sell anymore. I'm
gonna start using it again. Now it's a
personal item again. So it depend if it's
a personal item that you're using, it's not
If it's not a personal item, then it's
considered
and falls in other categories.
So let's take some examples.
Your and and and this doesn't matter if
you absolutely
need them or you don't.
Even luxury items that you own, which are
for your personal use, are exempted from being
considered zakah. So let's take a look at
your house.
House is a very, you know, expensive thing,
in in many parts of the country, like
like here.
So Zakat is not due on your house
if you're living in
it. If you're living in it, Zakat is
not due on your own house. Even if
you had,
let's say, a vacation property, which you're not
making any money off of,
It's not due on that vacation property.
Okay?
Number 2,
on your clothes. You don't have to pay
zekai on your clothes no matter how many
clothes you have. No matter how many clothes
your wife happens to have. Right? They tend
to have more for some reason, but doesn't
matter how many pairs of clothes they have,
it's still not considered to be. It's a
cow table. Number 3,
your food. How much food you have? You
shop at Costco or something, you got so
much extra food, you don't have to pay
it on that. Your furniture,
doesn't matter what quality it is. It's leather
or it's nylon or vinyl or whatever it
is, you don't have to pay. Transport vehicles.
Any transport vehicles you own. You have a
truck, you have a car, You have a
weekend car, and you have a weekday car.
You cruise around in your weekend car, and
you have your weekday car, and you don't
actually need 2 cars. But they're both purely
for personal use, not for not for
collecting so that they go up in well.
It's not an antique car that you're hoping
is gonna go up and then you're gonna
sell it someday.
As soon as that becomes that way, then
it becomes a business type property because you're
just trying to sell it. So this is
ex exempt
recreational
vehicles.
You have some motorcycle, off road motorcycles. You
have some jet skis.
You got some whatever other things that you
have. You got a hovercraft or something like
that. These are considered recreational vehicles. They're exempt
because it's personal use.
Books,
weapons, tools, devices,
these are all for personal use. They're not
intended to make a profit off of them.
Therefore, they're exempted and you don't calculate them
when you're considering your Zakkad.
But
if you purchase something
with the intention
to kind of escape out of Zakah,
right, you you try and figure out a
way, you know what, I if I buy
this thing and I say it's for my
personal use, but you're actually trying to avoid
Zakah,
then you're gonna be held accountable in front
of Allah for that. So you have to
know what your some of the things that
it's by your intention.
So I'm let me give you an example.
Not so that you follow the example. Right?
So that you understand what not to do.
So someone thinks they're clever and they have
a $1,000,000 in the bank, and they say
I gotta pay 2.5% of the $1,000,000 all
every year. So what I can do is
I can buy a bunch of diamonds.
Right? I could buy this giant diamond, which
is worth a $1,000,000,
and I can keep that and I say,
you know, this is for my personal use
because it's not currency.
It's not any value, and I'm not trying
to sell it. I like to look at
it every week. Every weekend, I go home,
I feel great looking at this giant diamond,
$1,000,000 diamond, and it's like a saving for
you. Now you don't have to pay this
account on it.
And then one day when you when you
know you can sell resell this diamond back
for a $1,000,000,
you know, because there are always people waiting
to buy. Your intention is to just escape.
It's like, this is not some personal item
for you. Right? So in in that case,
remember that whatever you're doing for personal use
has to be through your real intention that
you really wanna be doing this, not in
order to skip some kind of zakat. So
there's people who do this kind of, you
know, zakat laundering
type of thing that they do. Be very
cautious about that. K?
So let's talk about the different types of
wealth,
in which Zakkai is gonna be due. So
the first one is there's currency.
Currency
is basically the most common type of wealth
that people own.
Currency is the thing that you use every
day. It's the dollars and the euros and
the, you know, checks and all of these
things. This can be coins,
bills, checks, money orders.
This is all considered to be currency in
any society. Now currency is the basically, the
medium of exchange in any society that you
have, and all forms of currency are zakatibol.
Zakatibol is due on all forms of currency.
So let's take a look at some of
the types of currency that's there, or let's
take a look at some of the way
it works. So there's accounts and investments.
Any accounts that you have or investments that
you have are basically considered to be currency
because they're the equivalent of currency. So if
you have a checking account, you have a
savings account, you have a CD account, you
whatever type of accounts you have, all of
them are Sagatibil
because they're just a store for that type
of wealth, that currency.
And any investments that you have are also
zakatibol,
but the way you calculate your investments when
you're paying is that you calculate them according
to the current market value
of the investment right now. So if you
own stocks
or if you owned,
you know, bonds,
which
Muslims are not supposed to own anyways because
of the interest involved. But let's say you
own, some one of those things.
Now there's a current market value. The day
you're gonna be paying your Zakkah, you have
to check what the market value is. You
don't pay it on the original purchase price
that you bought it at. So if you
own, let's say, Apple Computer stock or you
own Tesla stock and you bought it for
$50
a share,
and now all of a sudden it's worth
a 100 on the day you're paying Zaka.
You have to pay it on a $100
per share because that's the actual value of
the item that you have. It doesn't matter
what the purchase price was and doesn't matter
what it's gonna be tomorrow.
It it doesn't matter what it was yesterday.
It's what it is today,
the day you're paying yours account. K? So
it's on your current,
market value.
If you buy a stock
with the intention of only acquiring dividends,
the main reason why you bought a stock
is you wanna get dividends from that stock,
not because of the investment itself.
It's still gonna be treated,
as as business merchandise. It's still treated as
a type of investment because of the way
the stock market functions here in the United
States of America,
k, or in in most countries. The way
the stock market functions,
still considered to be an investment.
There's one exception.
The exception is if you are actually the
owner
of a large part of a company, you're
a major owner in a actual company,
then you can calculate your zakat not as
a stockholder,
but as a actual partner
in a company, and there's a way to
calculate Zakat in a company, which we're gonna
cover. That's the one exception to the rule.
But if you own a stock,
it's not so much that you actually really
own a part of the company. The technically,
you do and you don't.
But at the same time, you have to
realize that,
the way the market works, it's like an
investment. So you're gonna be paying it on
the value of the stock itself.
Any
investments
which have a different currency value
from the market value, like collectible items, collectible
coins,
vintage comic books, and all of that, you're
gonna they're gonna be considered business investments
as long as the intention is to sell
them eventually.
So let's say you bought
the first
Spider Man comic book that ever came out.
Amazing Fantasy 15, 15th edition. It has, like,
10¢ on the cover.
Okay. First time Spider Man comic book ever
came out, and
you like to read that comic book.
Right? You would be really old nowadays because
this was long time ago, but you really
like to read it, and every every month
you go and you read the comic book,
and you have no intention of selling this.
You just enjoy the comic book itself.
The the cover price that you have, this
is considered to be personal use, so you
don't need to pay a second on it.
But if you go and you buy the
same thing, right, and you somehow got a
deal on it, and it says, well, it
says that it's worth 10¢ on the cover,
but it's actually worth $10,000
because it's such a rare comic book.
You have to pay this account on the
$10,000
value of the comic book. Same thing with
coins, for example. So if you own one
of those really, really old,
$2 coins or $1 coins or something like
that, which is really rare and valuable,
and you're planning on selling it on eBay
or something like that, you can't say, well,
look. The coin says it's worth,
$1,
but you're actually gonna be selling it for
$50.
Whenever you buy a a a 1 ounce
gold coin,
let Maple Leaf or something like that, it's
or American Eagle. Right? The US gold coin,
1 ounce coin. It's worth over $1200
right now. But on it, it says it's
$50.
So you could say, well, it says $50.
I'm paying second $50. No. You're paying it
on the actual value. So when do you
consider it to be a personal item, and
when do you consider it to be an
investment?
When which value do you use, right, when
you're gonna be considering it? If you if
if you're gonna be able to sell it
and if it has some actual
even if you're not selling it, it has
some value, you have some gold coins and
they say $50 on it. The market value
of those coins is completely different. So you
calculate according to the market value.
So that's the,
that's the principle that you use.
So you you have to figure out what
your intention is. Some people, they have a
dual intention,
and that's fine. You can have a double
intention. Your intention is, I wanna have this.
I really, really like my stamp collection.
Right? This I enjoy collecting stamps,
and I wanna have this stamp book, and
I wanna have this, and I wanna have
that. But at the same time, it's it's
very profitable. I can sell this stamp collection
that I have for a lot of money,
because they're rare
stamps. So you have a double intention there.
You like it for personal use, and it's
a good investment, and you could sell it.
You have to figure out what is your
primary intention.
Which one is it really more of?
Right? And it changes over time. So you
have to figure out which one it is.
If it's more for investment purposes, you have
to pay Saika. If it's more for personal
purposes, you don't have to pay Saika on
it. So you have a baseball signed by
some player, and you really like you really
like that player and you keep that ball
with you. But you know that baseball
because it's signed by that
player, I don't even know who,
it's been a long time, Mickey Mantle or
some some old guy. Right? That may be
worth $500.
That so what do you do? Do you
value that as a card? Because in case
you lost your job,
you know you could sell that baseball on
Ebay for $500 easily, and you get $500
cash for it. So do you consider that
to be a personal item, or do you
consider that to be the equivalent of a
investment where I could sell this very easily?
Someone will buy it from me. You have
to figure out what your primary intention is
before you make,
that decision.
Okay?
Now, there are some accounts
which will have access restrictions.
Alright. So like your your checking account,
generally your savings account.
Whenever you feel like you can go to
the bank and say, you know what? I
wanna withdraw $5,000
from my from my account, and they'll give
you the cash right there.
But there are some accounts which have access
restrictions,
like retirement accounts.
And retirement accounts, like an IRA account
or a 401 k account or certain type
of pension plans, these are known as accounts
with access restrictions.
So there are certain rules which you have
to keep into consideration,
when it comes to these things. The first
question is, are they
Do you have to pay on them because
there are access
restrictions on whether you can actually withdraw from
that money or not? Well, the first thing
you have to look at is, does it
is it an asset that has
the potential to increase over time?
And the answer is, of course. The whole
point of the retirement account is that you're
trying to make some investment through it and
profit out of it. So it invest invest
it. Makes more money by the time you
retire. You can pull out more money than
you had actually invested. So the purpose of
the retirement account is to actually increase in
value over time. So that's number 1.
Alright. So it is considered
from that perspective.
The second,
thing to, you know, keep in mind is
this restricted access account, will you actually get
access to it? Like, is it considered your
money or not?
So if it's considered your money, if it's
actually belongs to you,
right, then you're gonna have to pay zakah
on it. If it doesn't fully belong to
you in reality,
then you don't pay zakat on it.
So let's take a look at 2 different
types of accounts.
One of them are retirement accounts. So there
are 2 types of retirement accounts.
There
are defined
contribution plans,
and there are defined benefit plans.
In the United States of America, there used
to be something called a pension plan, and
it's becoming more rare except with government employees.
A pension plan is what you call a
defined benefit plan,
and they're being replaced now meaning defined benefits
means you get certain type of benefits
that's clear cut when you retire, and you're
gonna be getting this money. And there's another
type of account called a defined contribution plan,
which is generally characteristic of 4 zero one
k's and IRA accounts and all of that.
So these are 2 types of retirement plans
that exists
in America, and it exists in other countries
as well. And the shift
happens to be most companies are moving to
defined contribution plans
rather than defined benefit plans.
So both of these accounts,
they're
analogous to money that is actually in your
possession because the money is does belong to
you in reality. So whatever you contribute or
whatever employer contributes is in your name, fully
and completely.
Such that
if you were to lose your job
and your house,
and you're about to go live out on
the street,
would you have access to that money that
was sitting there if you had no other
money? The answer is yes, you would. You
would get access to it with certain penalties
and fees, but you would get access to
it. So you would not end up being
totally poor living in a box outside on
the street.
So that's one way to determine whether you
own it completely or not. And the second
is, does it inherit to the next your
next of kin?
So if you pass away,
will your children and your spouse and your
other people who are supposed to be inheriting
from you, will they inherit
that money that was there inside that retirement
plan?
And the answer is yes.
They will then. They will inherit it as
well, and you can define how you want
them to inherit it. So that's when so
when it comes to retirement plans,
you have to pay Saka on retirement plans.
They are as accountable.
Whether it's 401 k or it's IRA or
it's Roth IRA or it's a pension plan
from your company, it is considered to be
Sakautable.
There's a second type
of,
account,
second type of plan, what we call that
resembles more of some type of insurance,
like Social Security, for example.
So you, you take the same principles and
you apply it to Social Security, which you
pay for. If you're working, you have to
pay into Social Security on a regular basis
from your paycheck.
So now the Social Security
resembles
insurance more than it does,
you actually owning the wealth. And the reason
for that is because when it comes to
Social Security,
if
you, lose your job and everything,
the benefits will be coming to you, but
not necessarily equivalent to what you had actually
paid in and what it's worth. And if
you die, if you pass away,
you your spouse can inherit your Social Security
plan
depending on how old she is.
So the amount that she'll get if she's
at retirement age is gonna be more if
she did not hit retirement age, and it's
not gonna be the same amount that you
would have gotten had you reached retirement age.
So Social Security is more of a type
of insurance
where someone is paying, you know, agreeing to
pay such and such on your behalf according
to a certain type of equation.
Whereas a retirement account
is actually something where you own that money
and you possess that money and it's in
your possession,
even though you may have restricted access to
it. But you will have incidental
access to that money.
Now there are a number of other things
to keep in mind, and that
is that,
some people will say, well, why should I
have to pay if I don't have access
to the money? Well, let me give you
a a simple scenario.
You have
$100,000
in your 401
k retirement account
because you contributed and your employer contributed every
single year. And in your checking account,
you have $3,000,
which you could withdraw at any given time.
K.
There's another person,
person b,
they have no retirement account
because their employer doesn't offer that, and they
don't have it.
And they
have $6,000
in their bank account only.
So would it make sense that person b
with 6,000 because they they meet the minimum
requirement of paying zakat, they pay zakat every
single year on their $6,000,
yet the person who actually has a $103,000,
3,000 in their checking account, but a $100,000
saved up in a 401 k, that they
don't have to pay Zakah.
And if both of them lose their job,
both of them lose their all their wealth,
they they they lose their house, they lose
everything,
and both of them are about to be
on the street.
This person can withdraw and he has access
to that $100,000
and his value net worth is gonna be
a $103,000,
yet he wasn't paying Zakka. And the person
who had 6,000 in the bank, he was
paying Zakka the whole time.
Definitely would not be fair. Right? So this
is the hopefully,
this is you understand why,
we pay, it's like, on retirement accounts. Now
the question is, how do you pay?
And can you do you pay on the
entire value or you don't pay on the
entire value? So there's 2 considerations
to to to keep in mind when it
comes to retirement accounts.
And I'm going into this much detail because
these are the most common questions that you
get about, Sika, because they're very difficult.
They're new scenarios that people aren't familiar with.
So
the first is
if you withdraw from your retirement account early
before you retire, there's a penalty that's gonna
be incurred
on the account.
So the question is, do you deduct the
penalty
every year when you're paying your zakat out
or you don't?
And, this is something that I've really discussed
with several scholars, in this area. We've really
debated it out back and forth, and we
all come to the conclusion that you do
not subtract
the penalty unless you actually incur it. Because
if you never incur the penalty and you
end up retiring at the age of 60
whatever,
and for 40 years you've been paying Zakkah
on that money, but you kept on deducting
the penalty,
and you didn't pay it on that, but
then you retired, you never incurred a penalty,
no one ever charged you any penalty in
your life,
then you've actually underpaid your Zakkah.
Right. So if you actually incurred the penalty,
then you deduct it. If you don't incur
the penalty, you don't deduct it.
The second consideration
is
taxes.
So most of these retirement accounts, when you
put your money into them,
they
are pretax. They're exempt from tax
at the time your money is being placed,
and
you're utilizing that capital to it's being invested
for you, and you're making more money off
of that capital. So the fact that the
taxes were not subtracted,
you can make more money off of it
because you have more in there for now,
but there's a catch.
The caveat is that when you retire and
you decide to draw from that money, or
if you decide to draw early because you
have an incident of
poverty, incidental poverty, or you have medical expenses,
or you wanted to buy a house, or
something like that,
you will withdraw that money and then the
taxes will automatically be due.
So it would make sense
that you subtract
the taxes no matter what. Somehow, somewhere,
taxes are gonna be taken away from that
retirement account that you have.
So you should be subtracting
the taxes
that you would have incurred
when you have access to that money in
your retirement account.
But there's the problem.
The problem is,
you don't know when
you're going to withdraw the money,
and you don't know what your tax bracket
is going to be when you're withdrawing.
So there's a there's a unknown variable involved
here. You don't know what your tax bracket
is gonna be. So if you withdraw it
when you're 50,
it's still considered early withdrawal. Your tax bracket
is very different than you withdraw when you're
70, and you're totally retired,
and you have nothing else to do. You
just sing on island, vacationing,
and just praying Fajr every morning in the
Masjid, you're praying your tahajjud all night and
everything. I'm trying to redefine the environment for
you. And you're reading Quran, and this is
your this is your your retirement, and this
is all you do all day. You don't
have a job. Your tax bracket is completely
different. So when you withdraw that money, your
tax the amount of money that's gonna be
taken from you is gonna be very different.
So there's 2 options here. There's 2 potential
options here. And there's no 100% solution, but
this is the closest,
you know, good advice that you can follow.
Option number 1 is,
you estimate
what your minimum
tax bracket
is going to be
from now
until your retirement age.
It's gonna be 20%. It's gonna be 30%.
What most likely the minimum is going to
be, because it it fluctuates over time.
You calculate what is gonna be my lowest
lowest tax bracket. Let's say 15%,
20%, whatever it is.
You deduct
that percentage
from the money and you pay your zakat
every single year.
And what you do is you keep track
of it.
You keep a tally of it,
and most likely, your tax bracket is gonna
be much higher than that.
So in the end, by the time you
hit retirement age, you've overpaid your Zakah.
And if you overpaid your Zakah,
count as a charity for you. If you're
very strict and you're like, I don't wanna
give extra charity, I'm only giving the zakah,
you can keep an account of it, and
you can readjust your zakah payment when you
retire,
and subtract this much that you overpaid,
if you're really that staunch about it. Okay?
The other option you can do
is that you can take your maximum tax
bracket, which would be your current tax bracket
right now,
and you would subtract that amount
from the 4 zero one k payment,
but you would have to keep a record
of it.
Absolutely keep a record of it right now,
because what's gonna happen is when you actually
withdraw that money, a different amount of taxes
is gonna be subtracted from it.
And then most likely, you've underpaid your zakat
when you deduct. You didn't know in advance,
but you've underpaid.
So what you do
is you remember what you had underpaid all
that time, and as soon as you subtract
you you withdraw that money and then it
starts getting taxed,
you start making up for the Zakat
that you had actually been short this previous
years. So these are the 2 ways you
can do it potentially.
Alright?
The safer way, obviously,
is to overpay your Zaka rather than to
underpay your Zaka. But these are 2 potential,
options that you have when it comes to
your retirement account. Okay? So this is, when
it comes to retirement accounts.
Alright. Moving on to, gold and silver.
So when it comes to gold and silver,
in the history, gold and silver have always
had intrinsic values throughout the world,
until recently,
the last 20th centuries. They still have value,
but it's not considered to be a currency
or anything like that. So that's why whenever
you have
gold, which is like in the form of
nuggets
or bars or coins
or something that's that's not considered personal property,
but it's a type of exchange medium that
you have,
then that gold and that silver is zakatable,
meaning you pay zakat on that.
But if the primary reason
of you having that gold and silver
is for your personal use,
not because you're using it as a form
of currency or something like that, then in
that case, you have no intention of investment
or anything. Then Zakat will not be due
on that.
So let's take an example.
An example would be if you have a
frame in your house,
right, and you got a picture
of,
the Masjid and Makkah. You got a picture
of the Haram, and you like to have
that picture up on your wall.
And it just so happens that the frame
that you bought, you you you love that
picture so much, you bought a a gold
frame, which actually has gold around it. It
has some gold
places and everything, and that gold has value.
Right? That gold let's say there's like let's
say there's like 3 ounces of gold in
your
frame, and you really want it to look
nice.
Right? So in that case,
do you have to pay Zakah on that
frame?
No. Because it's for personal use.
K?
Now,
there is an opinion of the Hanafi school,
the school of Ima Abu Hanifa.
He said, even that,
you will have to pay because it's gold
and it's silver.
Because gold and silver was considered to be
currency.
You could literally just as soon as you
become poor or something, you could just take
that down and melt it, make it into
some coins, and now you got money that
you could give to anyone. So his understanding
from that perspective, it it was there. Right?
But generally, if you have a personal item,
it's considered a personal item. The same thing
with jewelry.
So we know that in the Muslim community,
sisters got a lot of jewelry.
Nice. It's the way it is. They got
a lot of jewelry.
Most sisters are worth more than the net
worth of their husbands because of their jewelry.
Right? It's true or not true. It's true.
Right?
So what happens is, do you have to
pay Zakat on that jewelry or not?
Well, it boils down to,
is this considered to be purely for personal
use, or is it considered to be for
a type of investment?
And many
women,
they have a dual intention in their minds.
Right? If it was Imam Abu Hanifa in
the Hanafi school, he says it doesn't matter
what your intention is.
Gold is gold, silver is silver. Whenever you
need that money, you could just take it
to the guy on the street, you know,
these big giant signs that saying we buy
gold, and he'll just go and do a
little acid test real quick to make sure
it's real gold. He'll melt it out there,
and he'll just give you cash for it
so you have straight up value.
So from that perspective, he had a point.
Right? So he says you gotta pay on
everything.
Any gold, any silver that exists anywhere, if
it's in your pen, if it's in your
if it's on your cell phone or something,
you gotta pay Saqq on that because it
has a value.
But according to the other schools, they said
there's a difference between if it's personal use
or if it's like a investment type of,
vehicle.
So you really have to check your own
intention.
Right? Your intention is, is this more for,
like, you know what? If my husband ever
tries to mess with me, tries to, you
know, leave me or something like that, I
got a $100,000
worth of jewelry sitting in the bank. You
can't threaten me with anything.
That's
an investment intention.
And then there's other ones who say, hey,
I have to wear a different gold necklace
every single day because I went to fashion
school, and I'm just stylish like that, you
know. So that's that's the reason why I'm
gonna do it. So it really depends on
your intention.
My advice would be, if you wanna be
on the safe side
and you just wanna pay a little bit
extra, go with the opinion of Imam Abu
Hanifa.
K? If if you got a lot of
jewelry,
if you give out 2.5%,
you have, like, you have a 100 bangles
and they're sitting in the safe deposit box
and everything. If you gave out 2 and
a half bangles
every year, you know what you could do?
You can get your husband to buy you
more jewelry every Eid or something. Just put
a little pressure and have to buy you
more, and you end up getting the same
amount every year. So you could do that.
If that works for you. That's better. It's
it helps the poor more as well.
Right? The second option is if you don't
wanna do that and you wanna go with
personal versus
investment,
then you have to figure out is this
personal or is it an investment? So my
general advice is this. If you keep your
jewelry in a safe deposit box,
k, and you go there
maybe once or twice a year to pull
out some of that jewelry,
that's more of investment related jewelry.
If you keep your jewelry at home and
you're wearing it, like, on a regular basis,
like, at least once a month or something
like that, that's considered your personal use jewelry.
You can exempt that. You can pay on
some of your jewelry and you can pay
on not some of your jewelry that you
wear on a regular basis. This would be,
I think,
you know, you can go with that as
well. So that's when it comes to,
jewelry and when it comes to, you know,
gold and silver and jewelry and all of
these things. Moving on to business assets. So
when it comes to a business, if you
own a business, you have to also know
which business assets do you pay zakat on,
which ones do you not pay zakat on.
So when it comes to a business, some
things are zakatable, some things are not.
So here are the things that are zakatable.
The merchandise and the inventory that you actually
have in your business,
which you've purchased with the intention of selling
it and making a profit from the sale,
is acceptable. You gotta pay the zakka on
it. So if you own a shoe store,
all the shoes that you have in your
store, you gotta pay on all those shoes
that you have at the end of the
year. Why? Because you're gonna be selling them
for a profit. And let's say you were
to shut down your business or something. You
have all these shoes, you can liquidate them,
and you get money for that, and you
have you have wealth. So it's considered your
wealth. So merchandise and inventory, number 1. Number
2, any raw materials that are used for
the production of a product
that will be sold.
So you have a ton of metal and
silicon, and they're sitting
and you're gonna use them in the next
6 months to make some tech electronic devices,
and you're gonna be selling them. That's your
business.
The raw materials itself on the metal and
the silicon and the other things that you
have, the plastic and everything, that's sitting there
to it's gonna be used to make a
product.
You have to pay it on the raw
the value of the raw materials right now.
Because you if even if you shut down
your business, you could resell the raw materials
back to someone else. So that's number 2,
you pay on. Number 3,
the receivables
you have, which are currently due right now.
Now in business, a receivable is basically
what when you most businesses,
when you sell something to someone, they don't
you don't you don't require them that they
pay you cash on the spot. So you
send them something and they say, okay. You
have to pay me within 15 days or
within 30 days called net 30 or, you
know, 90 days or whatever it is. So
those receivables that are due,
they're like debts to you. It's almost like
you gave them a loan. You gave them
the item and they didn't pay you yet.
Those are receivables.
You have to pay, Zaka, on those receivables
because it's technically your money. It's about to
come into your possession.
Right? So that's you have to pay on
that. And lastly, the currency that your business
possesses. So the bank accounts and all the
accounts that your cash on hand that you
have, you have to pay zakka on all
of these things. What you don't pay zakka
on
is
on fixed assets.
For example,
buildings,
land,
all of these things. You don't pay zakah
on those fixed assets.
Number 2,
assets
which are rented out for profit.
Alright.
So for example, real estate.
So if your business,
even if it's not your business, let's say
you own one home.
Okay? It's kind of like your business, and
you're renting out that home, and you're getting
monthly rent from somebody else.
Every single month you're getting rent. Do you
have to pay Zakat on the actual value
of the home itself or not? The answer
is no.
Because it's considered like an instrument which you're
using
in order to make profit out of. So
you're gonna be paying on the rent that
you collect,
but you're not gonna be paying on the
value of the home itself because the value
of the home is kind of stuck. You
can't do anything else with it because someone
else is living in it because you're renting
it out. So, therefore, you don't pay on
the actual
property itself, but you will pay on the
rent because the rent is coming to you
and you're depositing it into your bank account.
At the end of the year, when you
pay your zakat, you're gonna look at your
own bank account and determine
from that
money what is gonna be the final value.
K? And if you happen to have a
mortgage,
it's the same thing. It's the same. And
I'm not commenting on whether it's Islamic or
not to have a mortgage. This is a
whole different topic. But if you have a
mortgage and you're paying mortgage payments, yet you're
receiving rent payments,
you're generally gonna be paying the mortgage payments
out of one bank account, and you're generally
gonna be receiving rent payments,
or to you, and depositing it back into
the same bank account. So it ends up
almost cancelling itself out. So at the end
of the year, you're paying from that same
bank account, so it ends up being fine.
There's no issue with that. K?
But you have to keep in mind, if
your primary intention
is to sell an asset, like, let's say
you're selling real estate property. You're buying a
house
and you fix it up in 3 months
and you what's called flipping it. Flip that
house meaning you sell it for a profit,
then you will pay zakat on the house.
So if the primary intention again, it's about
intention. If your intention is to sell
and make a profit out of it, you're
gonna pay zakat because it counts as inventory.
And if you're not and your primary intention
is to use this like a tool to
rent it out and collect rent on it,
then you're not gonna pay it on the
actual
tool that's making you the product. You're just
paying it on the money that's coming in.
So then you consider merchandise.
So
so usually people have 3 one of 3
intentions when it comes to property.
The first intention is you wanna reside
in a property.
That's your personal property and you don't have
to pay zakatib.
The second intention is you wanna rent it
out. It's an investment where you wanna produce
wealth on a regular basis. Monthly basis you
collect rent.
That is also not zakatib.
And there's another intention when you buy a
property and you intend to sell it and
make a profit off of it. That is
zakatibou.
So you have to pay zakatibou on the
third one, but not on the first two.
K? The second
thing so we said, you don't have to
pay on fixed
assets, like land.
You don't have to pay on,
things which are rented out.
You don't have
getting to
what this minimum amount of
really is. So we kept on saying nisaab
nisaab. So nisaab is this minimum amount. So
how do you calculate what the minimum amount
actually is?
Well,
the minimum amount
is basically
any it's a threshold, actually.
So anyone who owns less,
the sakatibil wealth
below this threshold,
they don't have to pay zakah.
And if they own above this threshold,
they have to pay zakah even if it,
you know, even if it covers all their
expenses and everything like that. Even if, let's
say, they're below the threshold
and they have all their expenses covered.
They're not considered to be
poor in their society.
They still don't have to pay as a
cow because that's the threshold that you pretty
much,
meet,
because they're generally not considered well off. So
it's not just, like, abject poverty, but it's
someone who's
still not at the level of being kind
of wealthy.
So let we're gonna talk about it in
a second. But there's another condition is you
have to have full ownership of that wealth,
and you have to have access to that
wealth in order for it to be considered
your wealth in the first place. So, you
know,
if someone
took something from you and it belonged to
you and you can't get it back, and
you say, well, that was worth $10,000,
but I have no other money besides that,
it's not considered to be in your possession
really. So you don't count that.
So there are different assets.
Different assets have different minimum amounts, different Nesab's.
Now usually wealth is in the form of
money.
So wealth in the form of money has
a specific Nesab, which is one of 2
things.
It's either 85 grams of gold
or
595
grams of silver, and that's pure gold and
pure silver.
So if you have 85 grams of gold
equivalent
or 595
grams of pure silver,
you have to pay zakat if you have
more than that wealth.
And if you have less than that wealth,
you don't have to pay zakat.
So what is 85 grams of gold? Well,
we use ounces in America.
So that's about 3 ounces of gold.
K? And 595
grams of pure silver, and when we say
pure, we mean 24 karat, the value of
24 karat.
That's about 21 ounces.
So 3 ounces of gold,
21 ounces of silver.
Okay?
So now
you need to think okay.
In the past,
gold and silver used to have very similar,
not similar values, but silver used to have
a much higher value and used to be
closer to gold than it is now. So
if you look at the figures now and
you say, well, 3 ounces of gold should
be almost equivalent to 21 ounces of silver.
It used to be the case,
but it's absolutely not anymore.
And there are many, you know, economic reasons,
historical reasons why that's not the case anymore,
but silver has devalued completely.
So we're talking about a major difference now
in the values. In the past, it used
to be very similar.
So if you had 3 ounces of gold
or 21 ounces of silver, you're kind of,
almost at the same region.
But now things have changed completely. So let's
take a look at some of the calc
the the the calculations.
How do you figure out
what the actual value of gold is? Well,
first of all,
on the day that you're planning on paying
your zakah, you check the gold price. The
gold price go changes every single day. So
last year when I did the seminar,
the gold price was
£156.
And now I checked yesterday,
the value of gold is 1277
per ounce.
So pretty significant difference.
So what you would do is you take
the value so this is the website you
go to. You go to Monex, one of
the best websites out there. It's a company.
You go to monex.com,
m0nex.com,
And you look at you click on live
prices
because it gives you the literally the live
prices of what the actual value of gold
and silver is, and you check the spot
market price,
not anything else. You check the spot market
price value of gold,
the spot market price value of silver. And
I checked yesterday,
for gold it was 12.77
per ounce,
and for silver it was 19.66
dollars. $19.66
per ounce for silver.
So what do you do? You simply multiply.
So $127
gold per ounce,
and how many ounces do you how many
ounces do you have to have in order
to pay this account?
3. So it turns out to be $3,831
is the minimum gold threshold.
And for a silver,
19.66
times 21
is $412.86.
Okay? So you see a huge difference between
two figures.
One of the figures tells you, you have
to have $3,831
before you have to pay zakat, and the
other figure tells you, if you have $412.86,
you have to pay zakat.
So what do you do? This disparity didn't
exist in the past. So now how do
we deal with it? So there are 2
ways to look at it.
The one the ways to look at it
is,
1, you look at the cost of living
in your society.
So if the cost of living in your
society is very high
and it you tend to need more money
in order to even survive in that community,
you should use the gold value.
So if you take a country like United
States of America, for example, cost of living
is high. City like Orange County, cost of
living is quite high. So you use the
gold value. So if you have less than
$3,831,
you don't have to pay Zakkad.
Okay? So that's one way to do it.
And if you live in another place which
is very
it's it's considered to be very poor area
and the cost of living is very cheap,
really, really low, you should use the silver
value.
Why? Because if you use the gold value,
if you use the silver value,
you end
up helping
more more poor people get helped. Right? Because
more people end up paying zakah if you
use the silver value.
But if you use the silver value in
a very expensive area, you end up paying
zakah where you may not have enough to
cover your expenses. You're technically considered to be
poverty level.
Right? If you have only this much money
in the bank, you're considered to be at
poverty level depending on how much your your
general bills and expenses and utilities and all
of that stuff is, you could consider to
be at that level. So that's my general
advice.
If you live in a in a high
cost of living society, use the gold standard.
And if you live in a place where
the cost of living is low, use the
silver standard. That's another thing.
If you are independent,
you are the independent breadwinner of the family
or whatever, you're working and all of that,
you're no one else is supporting you, you
should definitely use the gold standard.
If you are dependent,
let's say you're you're a teenager
and you're working and you have a job,
but your parents are supporting you as well,
then I recommend you learn to give Zakat
by using the silver standard. So you got
your first job, you got your second job,
you're earning, you're making money, and now you
have a $1,000 in the bank account saved
up.
You're over $412.86
on the silver standard. You should pay zakat
to learn, to get in the habit of
learning to pay zakat because your parents got
your back anyways. Right? So it's not a
it's not a big deal if you're paying
zakat. So you're gonna be fine. It's better
to help the poor people with that money
that you have left over in the bank
account. So that's what I recommend when it
comes to gold and silver value.
Okay. So that's the that's the amount. So
if you need it again, 3831
for gold standard right now, dollars, and for
silver, 41286.
Okay. Now let's move on to debts and
loans.
What if you have debts? What if you
have loans out there? So there are debts
which are due.
Debts which are due, like now, they're not
deferred for later on, they're due right now.
You can they can be subtracted from your
wealth when you're calculating the Nisab.
So when you when you're calculating the Nisab,
you can subtract,
those debts.
Right? So let's say you have
you're going by the silver standard. You have
a $1,000,
$1,000 in the bank.
Okay? So you're above the standard, but then
you owe $900
on something you had bought.
So what do you do? In actuality, you
fall below the levels so you don't have
to pay a zika because you subtracted your
debt that you have. So you can subtract
your debts.
But if you have long term debt,
long term debt means it's not due right
now, like people who have mortgages on their
house, they have car loans.
Right? They have student loans.
You can't just say, well, I'm gonna subtract
that
because all the people who have a $400,000
home and it's on a mortgage, and they
say, well, I only have a $150,000
in my bank account, but I still owe
$300,000
on my house. Therefore, I'm actually in debt
technically, so I never pay as a cap.
That would be ridiculous.
Unfortunately, some people do that, but it's ridiculous.
So make sure that that's not the case.
You only subtract debt that is due right
now that you have to pay. When it
comes to a mortgage, when it comes to
a student loan, when it comes to a
car loan, it's not due, like, on the
spot right now. You have monthly payments.
So what use you can subtract your monthly
payment, but you don't subtract the entire value
of the loan because you're not actually required
to pay it right now. K? So you
cannot subtract that.
But you just you subtract the current installment
that's due right now. That's it.
Now if you have unpaid rent, you wanna
be very picky in particular about your Zakat,
you wanna just pay exactly the right amount,
what do you do? If you have unpaid
rent
or mortgage or monthly bills, they're considered to
be debts as long as they're currently due
right now, and you can subtract them. So
for example, if you're paying Zakah,
if it happens to be that you're paying
Zakah
on
the second of the month,
and your rent is due on the 5th
of the month,
right,
when was your rent
when was your rent actually due? Okay. It
it was due in the sense that
it became obligated. You got the bill. You
get your bill on the 1st of the
month, but you have 5 day grace period
to pay your rent. Right? So if you
were paying your zakat on the second of
the month or the third of the month,
yet you have not paid your rent, you've
not given them the check yet, they have
not cashed your check and taken it from
your bank account,
you can because it's due right now, you
have to pay it, you can subtract
that rent amount from the zakat that you're
gonna be paying.
But if you are paying on
the 20th of the month, and you say,
well, I have a next month's rent payment
due, and I'm paying zakat right now on
20th of the month.
Your rent is not due right now,
so you cannot subtract the future month.
Otherwise, you could subtract 2 months 3 months.
I wanna subtract the whole year. Well, obviously,
you're not gonna have anything left. You can't
do that. So you only subtract what is
due, like, right now. Same thing when it
comes to bills, your gas bill, your electricity
bill, your cell phone bill, your credit card
bill.
If it's been billed to you
and you've not paid it yet, like, your
credit card bill comes, and they usually give
you, like,
15 days to pay it or something like
that. Right? So if you've received your credit
card bill,
and let's say it's a big amount, $3,000
or something,
you can subtract it as long as you've
received it.
But if you're slick and you use, like,
mint.comapp
or something like that, checking your finances,
and you say, well, my credit card bill
that's coming up is gonna have this much
money, but it's not been billed yet. You
cannot subtract it because it's not technically due
yet. Okay? So well, actually, no.
I'll take that back. Technically, because when you
buy something with a credit card, that is
like a loan. So you you you do
have to pay that. So you will subtract
that. So when it comes to credit card,
you can subtract. When it comes to another
bill,
like your future cell phone bill, they bill
you in advance. Right? So if it's not
been incurred yet, then you can't subtract that.
You can't subtract something that's in the future.
Something that's already occurred and you've used a
service that you owe money on, in that
case, you can pay it. Like your Internet
bill or your TV bill, which you should
probably, you know, disconnect anyways for the good
of your family. These type of things you
should, you you can subtract on them.
When you have a debt which has no
specified due date so many people this I
I gave my friend a loan, $15,000,
and you know, he's I know he's good
for it, but I never told him when
he's supposed to pay it back.
And so do I subtract that or do
I not subtract that? What do I do
in that case?
If there's a debt and
there's no specified due date,
you what you do is you only subtract
it when the debtor, the person who's owing
the money, when he makes the intention to
pay off the debt.
So let's say you you know, you you
let's say my friend gave me $15,000.
K. And and I have no intention to
pay him back right now. And I'm thinking
about it, and he says,
anytime you want. I said, should I pay
you back now? No. No. Whenever you feel
like it. I have no need for any
of this money. Just take it for as
long as you want.
You cannot
he cannot and I cannot take that into
consideration
until we actually make the intention. I decide,
okay. I'm gonna start paying off that debt
now.
I'm gonna pay it off now, so then
I can start subtracting it. So, you know,
I actually wanna pay it. If I have
no intention of paying it, I'll pay it
in a few years or something. The guy
doesn't care. I cannot subtract that from my
zakat because I'm not actually gonna be paying
it off in the 1st place. So it's
considered to be a long term debt that's
not due right now. So you cannot subtract
that at the when you're when you're when
you're calculating your zakat.
If you decide to pay off part of
the debt now and you decide to defer
the rest, say, okay. I'll give you $2,000
right now, and I'll pay you the rest
later. What is later? You don't know when
later is. So what you do is you
only subtract that part that you're planning on
paying off right now.
You can't just subtract the whole thing. K.
So just keep that in mind.
What if you loan money?
So that's that's why if you owe someone
money. Right? You owes you owe the credit
card company, you owe your cell phone company,
you owe your landlord
all these bills and everything. These are, like,
debts that you
owe. Then there's a loan. What if you
loan someone else money? You loaned out your
friend $5,000,
and now you're going according to the gold
standard,
and you have $3,000
in your bank account.
So you're above or below
the zakat standard.
You're below.
Right? So, technically,
you you owe the person you you loan
them $5,000.
Right?
Do you consider that $5,000 to be part
of your money? And you say, actually, my
net worth is 8,000
because that's $5,000 of my money that he
owes me. Do I say I I'm I'm
worth 8,000, I have to pay zakat, or
do I say no. No. That's that that
that 5,000 is not in my possession. I
only have 3,000 in the bank account. I
don't have to pay this account. So what
do you do? So if you've loaned money
and it's possible to collect the money because
the person has the ability to pay you
back,
They actually have the money, and they can
pay you back, but they're just waiting and
you're waiting too and everything. Let's say you're,
like, a good friend. See, just pay me
back whenever you want. And the guy has
the money, and he can pay you, but
you just don't get around to calling him
or something. It makes no difference for you.
It's considered to be
in your possession
because you have the possibility to ask for
it anytime within the year, and they will
get you the money.
So you consider that money to be in
your possession, and you got a PACE account
on it.
So if I have $3,000 in the bank
and I load my friend $5,000
and he's got the money,
and I just have not I just didn't
have the time to even ask him for
the money. And now my my time comes
around to pay Zakat. And I look and
I say gold standard is $3,831.
I only have 3,000 in the bank, but
he owes me $5,000.
And anytime I feel like I can get
the $5,000 back from him because I know
he's good for it and he has the
money, That money is considered to be in
my possession. I have to pay Zakat because
I'm actually worth $8,000
whenever I feel like collecting.
So
if it's possible to collect it, it's considered
to be in your possession.
If the debtor
does not have the ability to pay your
money back see this guy, I loaned him
the money. Every time I call, he doesn't
have the money. Doesn't have the money. Doesn't
have the money. I can't get my money
out of this person.
In that case, it's not considered to be
in your possession, so you don't take it
into consideration.
But once you recover the money, let's say,
5 years down the road, you know, I'm
so sorry. I know I needed to pay
you that money, but I didn't have the
money until now. I finally got the money
now. I'm gonna pay you now. As soon
as they pay you, now it's considered to
be back in your possession and you start
calculating Zakat from this point in time.
Okay? So that's when it comes to debts
and loans.
Yeah.
When do you pay zakat on money? So
how do you actually calculate the timing? How
does this work? So remember there's a minimum
threshold.
Right? There's a gold and a silver one.
So we'll just say it's,
what did we say,
38104100.
So,
let's say let's just say for ease, 4
$4,500.
Okay? So
when a person first acquires enough money,
enough wealth that meets this nissab, this minimum
amount,
they should take a calendar and mark that
date.
Now the vast majority of people don't do
this, unfortunately, but they should. And it's your
responsibility
as parents
to teach your children that when they get
their 1st job, or not even their 1st
job, when they get some money in their
name,
grandparents are giving them, you know, I need
money and this money and all of that,
and they have a bank account and they
have a little, you know, you know, store
where they keep their money or something, you
have to train them and say, look, the
moment you reach this minimum amount of $500
for the silver standard,
you mark the date that you got it.
So you say, wow. Look. I just exceeded
$412 or something, which is the the the
zakat amount. So you put that date. Let's
say it's,
let's say it's June 16th
of the year, and you mark it. And
you say, Masha'Allah, now I'm a person who's
eligible
that I have to start paying Zakat.
But what you do is you don't pay
Zakat immediately.
So now that you you've gone above this
minimum threshold,
you start calculating now.
You wait for an entire year,
lunar year, 354
days.
If at the end of the year,
you look at how much money you have
saved up and you're still above the minimum
threshold, you're still above the 4 100, $500.
Now you need to pay his account. So
that's how it works. So look at Nasab
as a threshold like a line on a
chart, and your money is gonna kinda go
up and down, up and down, up and
down all over the place. If you are
above this line at the beginning of the
year and you're above this line at the
end of the year, you have to pay
sika. It means you've had it throughout the
entire year. K? And the purpose of that
is that you get an entire year
to benefit from this capital so that you
can invest it and you can make some
profit out of it so that you're paying
your Zakah from the profit rather than from
the capital.
That's the intention behind it. Right? So that
makes a it makes a lot of sense
when you think about it. So you mark
the calendar,
and then you wait 1 year. So June
16th
happened to be the date.
K? So you calculate 354
days after that, because remember, you can't use
June 16th of the next year, because that's
365 days. You calculate 354
days, and you look at that what is
it? June 16th minus 11, June 5th.
On June 5th, you check your bank account
again.
Am I above that $400
silver
or no? If I am, I owe Zakat.
If I'm not and I fell below, I
don't owe Zakat, and I just start from
scratch again.
K. So that's the way you start calculating.
So you have to keep track of, you
know, when you started this.
Now if you wanna make your life easier,
you just simply pick a day
in the calendar
of the year, which you're
likely to remember.
So Muslims use the, you know, today Muslims
use the lunar calendar
and certain times only. We use the we've
remembered the month of Ramadan.
So what you can do is you pick
a certain day in the month of Ramadan.
Say, Ramadan the first, I'm gonna pay my
zakah. Or Ramadan 15th.
Or the day
of Eid, or the day of Hajj. Right?
I'm gonna pay it on the day of
Hajj, or I'm gonna pay it on the
Muslim New Year,
Muharram the first. You pick any day in
the lunar calendar and you say, this is
when I'm gonna actually pay my zakat on
a regular basis. That just makes your life
easier. So, for example, me, I I pick
Ramadan 1st. It's just it's very easy for
me to do so. So I go ahead
and I, you know, choose that day. Many
people choose that as well. So you just
pick a specific date that's easy to remember,
and you say, you know what? I'm gonna
go ahead and pay all that time. So
you mark that date. You say, this is
gonna be my calculation.
Now
if you
first acquire the minimum amount of nissab,
let's say,
in,
6 months before Ramadan.
You got your first job and you finally
went above the threshold for the first time
in your life.
Right? So that was 6 months before Ramadan,
and you say, well, I wanna pay Ramadan
the first just to make my life easier.
I don't wanna remember this first date. I
wanna remember Ramadan the first. So if you're
really picky and you don't wanna pay your
zakah here, because you say, well, wait a
minute. If I pay my zakah this Ramadan
the first,
I've overpaid my zakah because the 1 year
has not passed.
Right? And if you say, well, I'm gonna
wait till the following year,
then you've let one and a half year
go by. So that's not fair either. So
you've underpaid your zakah.
So if you're really really what you can
do is just say, you know what? When
this Ramadan comes,
6 months ago, I'm zakat eligible. I need
to pay.
After 6 months, Ramadan the first came.
Now when it's Ramadan the first, if I
pay 2.5%,
I've overpaid zakat,
no problem, I get more reward. If you
really wanna be particular and you say, well,
wait a minute. It's only been 6 months.
It's not been a whole year. You can
take the 2.5%,
divide it by the number of months,
so you would actually pay how much percentage
on Ramadan the first?
1.25
percent because you've not had it for an
entire year. You've had it for half a
year. So what you're doing is you're paying
your zakah early. If it's only been 6
months, but you're trying to recalibrate your date.
Because let's say on April 1st, that's the
date where you got that amount of money.
You got you got your paycheck and now
you're you have to pay zakat after 1
year. But you say, you know, I don't
wanna have to remember April 1st and all
of that stuff. That's just a hassle. I
wanna pay on Ramadan the first. So what
you do is you calibrate and you say
it's been 6 months since Ramadan the first.
I'm gonna pay 1.25%.
And then the following year, I'm paying 2.5%,
2.5%,
2.5%.
So you can readjust
based on this formula by dividing taking 2.5%
a year, adjusted by the number of months
that you've actually held held the money,
or you could just overpay if you want.
Now
Zakah needs to be paid out as soon
as it's due.
Immediately, when it's due, you have to pay
your Zakah.
If you delay even one day, you're sinful
for not paying your Zakah out on time.
It's a very it's like prayer.
Right? Zohar prayer is zohar prayer. It's when
the time comes for it, you don't say,
oh, I'm gonna pray in the evening. You
have to pray that prayer at a certain
time. Same thing with zakah. As soon as
it's as soon as it's due, you have
to pay it. But you're allowed to pay
in advance.
So if you wanted to pay your Zakkah
in advance, you can do that. Let's say
there's an emergency.
There's a hurricane,
tornado
in some part of the world, an emergency
relief organization comes and says, we absolutely need
some help.
And you say, you know what? I would
like to give charity,
but I can't give any charity right now.
What you can do
is you can give your money in advance,
and then you can adjust it when it's
time for you to actually pay your account.
So you're allowed to pay in advance, but
you cannot delay payment. So how do you
calculate? So getting back to how do you
actually calculate zakat on money? And this is
obviously the the the most important part. So
what you do is the first thing you
do, step 1,
determine what the start and the end date
for your Zakkah cycle is.
Determine what is your Zakkah cycle. It's a
354
day, 1 year, lunar year cycle. So you
determine what is your start date and what
is your end date.
K. Mark it on a calendar somewhere.
You add up your assets,
all your acceptable assets, add all of them
up.
Your stock market investments, your bank accounts, your,
you know, the stuff that you're selling on
eBay, and this and that. Add up all
of that stuff, subtract all your debts,
right, from that amount,
and then you determine does it meet the
minimum amount or not according to gold or
silver.
Do you fall above the minimum amount at
the beginning of that year and at the
end right now at the end of the
year? Did you fall above that amount? And
if you did, you paid 2.5%
on the amount that you have now
at the end of the zakah cycle. This
is a huge misconception
among Muslims, so I'm gonna highlight it for
you.
If at the beginning of that year, the
zakah cycle year, you had $5,000
in your bank account,
and at the end of the zakah year,
you have $25,000
in your bank account.
Some Muslims will say, well, you only had
the $5,000
for the entire year. The 25,000
the other 20,000, it came somewhere in the
middle of the year. So you've not held
on to it for an entire year,
but that's not the way it works. You
pay
2.5% on the end balance that you have,
which is $25,000.
Right? And the reason for that is because
the Nasab is a threshold.
It's a line.
As long as you're above the line at
the beginning of the year and you're above
the line at the end of the year,
whatever amount you have at the end is
the amount you pay the 2.5%
on because your wealth will always fluctuate.
It will always, always fluctuate
in terms of what's going on. So you
have to pay at the final balance that
you have at the end of the year.
So I hope this is very clear. I'm
gonna say it one more time to clarify
so that you can tell your friends and
family.
If you have
$50,000
at the beginning of the year
and at, let's say, one day
one day before Ramadan the first, you're calculating
your zakat on Ramadan the first, one day
before
somebody
gives you a
gift of $50,000.
Now you're worth a $100,000.
You pay Zakah on a $100,000,
not on $50,000.
Right? So this is very important, and I
can I can explain to you if you
wanna debate everyone likes to debate the logic
of that with me? I can debate the
logic of that with you in the q
and a session.
Right?
So because it's so so it's common that
your wealth is gonna drop. Now another thing
is,
if you
break the nessab at the beginning of the
year,
and then your money goes in the middle
of the year below the
So let's say you have $500 in the
beginning of the year,
and then in the middle of the year,
you drop down to $200,
and then you go up to $800,
then you go back down to $100.
At let's say Ramadan 1st is your zakah
cycle. If it comes back up to $500,
in the middle, you had dropped
as long as you had it in the
beginning of the year and in the end
of the year, you still pay on the
final balance.
K. So it doesn't matter if you're dropping
below or you're not dropping below. K. So
that's another,
important thing to keep in mind,
because wealth will always fluctuate
throughout the year. It's it's very natural that
it's gonna fluctuate up and down. You can't
keep resetting, resetting, resetting all the time.
If for some reason
that your money was destroyed or lost after
your Zakah was due.
So Ramadan the first, let's say, you decide
this is my Zakah, I owe this much
money, I'm calculating my 2.5%,
I'm about to go and give it to
the charitable organization. You're driving with cash in
your pocket to the Masjid to give them
the Zakat money to distribute for you, and
all of a sudden it's destroyed.
You know, it's it's lost. Somehow
it,
you know, your children accidentally poured acid on
it.
A very rare scenario. But something happens that
it gets lost, it destroyed somehow,
do you have to still pay it? Do
you is it still eligible? The answer is
no. You don't have to pay it as
long as it was not your, like, let
let's say someone stole it from you.
Someone stole your money. K. Some there's some
disaster or something like that. It doesn't mean
you if you spent all the money, you
say, you know what? Wow. There's such a
great sale and you're on the way to
give the zakat money. I just I have
to buy that sofa, and you go and
you buy that sofa, and you come to
the margins, I don't have any zakat money
left. As long as it's not your fault,
right, you you don't have to pay, that
money. If it's your fault, then obviously you
still have to pay that money. So let's
take a look at, Zakat table here. Should
be a Zakat table up here.
This is how you calculate.
Alright. So what you do is look at
all the cash that you have in your
possession. Count everything. So at the at the
end of the year, you check your wallet,
You check under your bed. You check wherever
you hid cash. If you have a emergency
backpack, you put, like, a $100 in the
emergency backpack. You check there too. You check-in
your little shoe box that you, you know,
used to keep some money there. You check
over there. If you used to use, like,
$50 bills as bookmarks in your books, you
check your books,
calculate all the money, all the cash on
hand that you have, change and everything.
Write it down in the chart. K? Write
it down. Then
you take these are your assets. Then you
take your bank account balance. Every bank account
that you have, your checking account and your
savings account and your discreditunionbank
and your DISBank,
all the accounts,
foreign accounts,
your offshores, you know, Swiss, Cayman Islands accounts,
all of that stuff, your your money that
you have in your safety deposit box that
you are kinda hiding with your key and
everything, all of that, and you write it
down here as well. You write down all
the cash you have, write down all the
bank account balances that you have, add them
up.
You take the market value of all the
investments and all the securities that you have,
all the stocks,
all the bonds, which you shouldn't be having
in the 1st place, but everything that you
have, you write it down, you put it
there as well. K?
Then you take all the merchandise and inventory
that you have that you're selling right now.
So let's say, on Craigslist,
your iPhone is for sale because you wanted
to get rid of it, and you have
your old computer, it's also for sale.
Look at the value that you're actually selling
it for, the the value that you're probably
gonna get for it, and you write that
down as well because that's gonna be.
And if you have a business, you put
the merchandise inventory. Right?
And then you take your accounts receivable,
if you have a business, or your debts
and your loans. Right? And you write it
down, what do people owe me that they're
supposed to be paying me? This guy owes
me $50, and he should be paying me
by next week. That guy, he owes me
$300,
and he should be paying me within 2
months. So I should be getting that money
very soon. You take that and you add
it up there and you count it as
the money that's in your possession as well.
K? Then you take a look at your
loans
that you owe people, and you write it
in the other column.
So you're subtracting it. So these are ones
you're adding up. This is stuff that you
you that you own. Then you take your
loans. Right?
No. Sorry. Loans are what you've loaned out.
So you also add all the money that
people owe you. Then you take your debts
and you put it in the other column.
So I owe my credit card bill. I
owe my landlord
rent for the month. I owe my cell
phone company this much money. I owe electricity
bill. I owe my gas bill, and I
owe my friend $500 as well, which I'm
gonna be paying at the end of the
year. You take all of that and you
put it in a different column. You add
up the 1st column,
subtract it from the 2nd column, and you
end up having your total amount of
money that you're are you paying Zakkon,
multiply it by 2.5%,
or just divide by 40 to make your
life easier, 1 40th, and that's how much
zakah you have to pay.
That's gonna be the final zakah amount figure
that you're gonna be paying.
K? So this is the
practical part of Zakkah. This is how you
should be calculating
your Zakkah.
But
there's still some other aspects of Zakkah which
we need to cover, which are more theoretical
in nature because how many of you own
a farm? Does anyone own a farm?
Okay. So it's not gonna be very is
anyone a treasure hunter?
Anyone ever found, like, treasure chest, buried treasure
chest or anything like that? Okay. So this
is this is the theoretical part of the
Zakat which we have to study
because this is a college class. This is
college of Islamic studies class actually.
So
we have to cover all of these things.
So just just in case, because there are
there are Muslim farmers who own farms.
Right? They just didn't happen to come because
they're probably taking care of the animals or
something, but they need to know this stuff.
So let's take a look at some of
the stuff so you can go and deliver
the message to them. I don't drive out
to
Bakersfield or whatever it is. So
when you have wealth in the form of
agricultural output, there's a totally different way you
pay Zakat.
It's not it's not 2.5%.
It's not money in the bank because in
the past,
and still even in the press, in the
past,
people's value, people's wealth
used to not only be in currency.
It used to be in how how many
animals do you own. That's like your wealth.
That's how much you're worth. Right? And it
used to be how much land do you
own. And the land, we're talking about,
you know, vegetation producing land. How many fruits
and vegetables can you get from that land?
This was considered to be a very important
thing, even if even in the history of
the United States of America, which is relatively
a a young country.
Right? In In fact, I used to go
to England.
I went one time for a debate competition
in Bath, England, and we visited a high
school, and they used to make fun of
us. And they say, you know what? Our
school is older than your country. I said,
okay. That's fine. That's fine. But our state
of California is larger than your country. So
we kept on going back and forth. But,
anyways, it shows even America, which is relatively
recent country,
in the beginning, they used to only allow
land owners
to vote.
Right?
Only land owners oh, by the white land
owners, by the way. Only white land owners
were allowed to vote,
not anyone else, and certain other privileges and
all that. Why? Because that was their definition.
They didn't say whoever has
a $100,000. They said landowners. Why? Because that
was considered to be the mark of,
you know, of of property
at that time. So that's why these rules,
they still apply, but they were primarily built
on societies where
currency was not the primary or the only
form of what's considered to be valuable. So
just keep that in mind.
So any type of land that's used to
grow
food that is nonperishable.
Non perishable mean it's not gonna go bad.
It's gonna last an entire year without much
effort.
You have to pay Zakat on the land
or on on the crop, on the produce,
basically. So for example, wheat,
barley, dates, raisins, rice,
corn,
saffron,
cotton,
these are all things which you could literally
store in a Once you harvest them, you
take them out, you can store them in
a, you know,
shed or something like that and they're not
gonna go bad. So they're considered to be
a very valuable asset
and they're growing naturally from your land. Your
land is producing that and there's really not
that much effort involved. Right? Especially with modern
machinery and all of that. It's not that
much effort. So they're all sagittal.
But grapes,
apples,
vegetables,
they're perishable. They're gonna go bad.
You can't just keep them in a shed.
After 6 months, you come back and what's
gonna happen to your grapes?
They're gone. In fact, they've turned into alcohol
or something like that. So they have no
values. In in that sense, they're not perishable,
so you don't they are perishable, so you
don't need to pay Zakat on them. So
anything that's gonna be stored and it's able
to stay there, you have to pay zakah
on that. But what does zakah mean? How
do you give 2.5%?
It's not 2.5%
anymore. So if you have
saffron, you have cotton, you have wheat,
you don't take 2.5%
and give it. So
this used to be very common for farmers
type of wealth. And remember the people who
are getting Zakkiah, they're people who are in
need, and they need these things. They need
wheat, they need barley, they need food, they
need dates, They need all of these things.
So you're actually giving them
that stuff directly.
You're taking so farmers are supposed to take
part of their produce
and give it away to people who are
in need
even though they're not paying for it so
they can't afford it. So that's the point
of this. So the way that it works
is, first of all, there is a minimum
amount, the nissab. So what is the nissab,
the minimum amount that you actually have to
have before you start? You know, if you
have a little garden in your backyard and
you're growing,
I don't know, dates
or raisins or something like that or barley,
do you have to pay Zakat on that?
Well, there's a minimum amount. You have to
have 600
kilograms
of
product
before it becomes zakat zakataba.
Most people are not gonna have that unless
you're a big time farmer. Right? So 600
kilograms.
Now the way you actually calculate this is
there is no 1 year anymore. So it's
totally different than money. You don't wait an
entire year.
As soon as the harvest comes out, you
pay zakat immediately on this product.
And and what do you pay
if your land
was naturally irrigated?
Meaning through rain, through rivers, you know, you
happen to have near a river or something
like that, meaning you didn't have to put
in much work. You got you own the
land, you just put the stuff in the
ground, and you live in a place where
a lot of rain comes and everything,
no problem. Most of the year, it was
naturally irrigated. You barely put in any effort
and the stuff grew. Your job is to
just pick it out. You have to pay
10%
of that crop to the port in Zakat.
So Zakat is not always 2 a half
percent. It's 10% in this case.
If most of the year you have to
irrigate the land manually,
either through machinery or through manpower or something
like that for most of the year, then
you owe 5%
on this crop. So it's either 5% or
it's 10%.
Right? And remember, it doesn't have to be
in possession for a year. As soon as
the harvest comes, you pay immediately, because you
wanna give this crop out to the people
who need it in the first place.
Unlike money, there's one other difference.
Even if a person is in debt or
if the land is a type of public
property,
still Zakah needs to be collected from that
land and needs to be given out to
people who are poor.
Right?
But you're allowed, if necessary.
You don't have to pay in crop form.
You can actually pay in the monetary value
of this,
zakka of of this product that you're getting.
According to the actual market value,
of the crop itself when you're paying it
out. Okay? So that's when it wealth in
the form of,
owning a farm or owning land, which is
gonna produce something. The second one is wealth
in the form of livestock.
So if you own animals,
right, and the animals are grazing
most of the year
on the land naturally,
Meaning there's really not much you're you're not
going and giving them food in a barn.
They are going and naturally just roaming off
the land and they're eating and enjoying themselves.
And these animals are not for your personal
benefit. They're for commercial purposes.
You're gonna get milk out of them and
you're gonna sell the milk. You're gonna go
and sell the animals and, you know, people
are gonna, you know, eat them, slaughter them
and eat them or something like that.
Reproduction animals are a great
product because like cars diminish in value, diminish
in value. Animals,
they get pregnant, all of a sudden you
have a child, now you just double your
investment. You got another child, you know, another
animal. So
these are not animals for labor or anything
like that. These are animals where you're gonna
be utilizing them to get, you know, some
kind of benefit for them. These are subject
to Zakat.
So the minimum amount for animals, the nisav,
is a totally different table. So the minimum
amount is if you own 5 camels, you
have to pay Zakat, 5 or more camels.
You have to pay zakat and you give
out some of the camels that you own.
If you own 30 cows or 30 buffalo,
you're gonna be paying,
on the cows or the buffalo. If you
own 40 sheep,
goats, or lambs, that's the minimum amount. So
does anyone here own 5 camels, 40 sheep,
or 30 cows or buffalo?
Okay.
So Yeah. Ceramic figures don't count. So actual,
peep you know, live creatures.
So what we'll do is, if you take
a look at my book, which is available
online, Guide of the Believer,
actually no, sorry. I did not publish this
part yet. I'm publishing a book very soon
on this, which will have an appendix which
explains to you what to do, in case
a farmer comes and asks you the question.
But for now, we're gonna skip this part
since no one has any of these animals.
It's a very detailed chart. If you have
this many animals, you pay this much. If
you have this many animals, you pay this
much. And the Prophet, peace be upon him,
specified all the details
because animals were worth a lot of money,
and they're still worth a lot of money.
But this was a very important commodity, you
know, for people that they had. So
you can pay it in money or you
could pay it in animals. And just to
show you the the the balance and the
wisdom in Islam,
when someone is paying from the animals, let's
say you have 40 cows, and you're gonna
be paying zakat from them, you have to
be giving out one of the cows or
one of the sheep that you have or
one of the camels that you have.
Every creature has a different value.
Some of them are worth a lot because
they're strong, they're big, some of them are
really weak, some of them have little bit
defect here and there or something like that,
some of them don't walk very fast, they
don't run very fast. So in Islam,
when you give the animal, guess which portion
you're supposed to give from. Do you give
from the best of your animals, or do
you give from the worst of your animals?
Actually, you give
from the middle.
You don't give the best of your animals,
and you don't give the worst of your
animals. You give exactly in the middle, so
that you're neither neglecting the poor,
nor are you neglecting yourself by having to
give up your best animals that are there.
This cow produces the most milk I've ever
seen in my life.
Out of all the cows that I have,
you don't have to give that cow.
But you don't you don't give the other
messed up cow either that's not producing anything.
Right? So it's in the middle. There's a
balance and it shows you the balance of
Islam.
The rights between
yourself
and the individual.
And what you find is in today's world,
we have just 2 extremes. Right? We've had
in the past, the last 20th century, we've
had Capitalism,
it's all about me. Communism,
you don't matter at all.
No balance in between and Islam is that
balance. It would have
kept that cold war and all of these,
you know, things away. So So it shows
you the balance. So the more you learn
about Zakat, the more you look at some
of the rules, you see, wow. SubhanAllah. This
is exactly the type of balance that we're
looking for in society, yet no one's coming
with that balance. We got these really hardcore
left wing people, these hardcore right wing people,
and they're just fighting back and forth, and
you get to vote between the Democrats and
the Republicans, and where's the balance between them?
Islam is supposed to be that balance
in everything.
But anyways, moving on, buried precious metals and
minerals.
If you find
certain buried minerals or metals or something like
that, and if it's found on public property,
and it's clear that there is no owner,
and it's very little effort, very little cost
for you to actually extract all of that,
and this is considered to be like finding
a treasure. And people in the past, they
used to find treasures, you know. You hear
about it in movies and all of that,
but it did exist. Some people would bury
something in public land, and all of a
sudden, you find some of that stuff. And
there are still treasure hunters
that exist today. They go looking around for
treasures and they find it certain treasure. If
you hit one of these,
you you you made a lot of money.
So if you find a treasure
with very little effort or whatever,
you are supposed to pay 20%
of the value of that treasure in Saqqah
immediately,
not after 1 year, immediately.
Because it's public property, someone else buried it,
you just all of a sudden got all
of this money with no effort, you pay
20%,
that goes to the people who are in
need.
If you found it on your own land,
then it's considered your possession anyways. You don't
have to pay that zikka. If it requires
a lot of effort to extract it, like,
currently,
people who are running gold mines
digging for diamonds and all of that, it
costs 1,000,000 and 1,000,000 of dollars digging for
oil
just to go and get extracted. And it
might be there. It might not be there.
In that case, they don't have to pay
zakah on it. They're gonna pay zakah from
the normal 2.5%
of whatever they profit that they make from
all of that.
Right. So the last section
is the distribution of zakah.
How do we distribute zakah to people and
who is allowed to receive it?
This is not just anyone.
There's only specific people that can receive zakah.
So the Quran mentions 8 categories of people
in particular,
and we have to make sure that we
restrict
these categories to these 8 people. So categories
number 1 and 2,
people who are poor and needy.
K? And
basically, one of, you know, one of them
is a a a more level of poverty,
and one of them is a little bit
less level of poverty. So these are basically
people who cannot afford the necessary things in
life.
Alright. So what are necessary things in life?
Alright. Having a 32 gigabyte,
you know,
iPhone 5 s
is not necessarily a necessary thing in life.
Although some people think that, we're talking about
necessary things that they actually need for survival.
In today's society,
depending on where you live, if the public
transportation is very
unreliable,
then you need a car.
If it's not unreliable,
then you don't need a car. So it
really depends. Most people will say that you
need a cell phone.
You probably do kind of need a cell
phone if you wanna get a job interview
and you want someone to call you back.
You do need a phone line,
But you don't have to have
the AT and T unlimited talk, text, and
data plan per se. Right? So it really
you have to be very careful about when
you're defining what need is.
So,
usually, this is gonna be calculated by the
poverty rate in any given area.
The poverty rate is very different depending on
the region, the city you live in, the
state you live in, the country you live
in, all of that.
So
when a person is given Zakah,
they're supposed to either be given an amount
which either brings them back up to what
the nisab is, a minimum amount of the
people who are paying Zakah,
or they be given
an amount that brings them up to at
least above the poverty level
that they need to receive the Zakah. So
they can be given more than Nizav. So
if the poverty level happens to be x
amount of dollars, let's say whatever it is,
$7,000,
and then Nisab happens to be $3,800.
They're allowed to be given up to $7,000
if they need that money so that they
can, you know, survive for the whole year
or whatever it is.
So that's
what they're given and that's who receives
it. Now it's preferable
if you're giving Zakah or if you work
for an organization which distributes Zakah,
it's preferable that you give what will help
that person
become self sufficient.
Some people, if you give them cash, they
may not know what to do with the
cash and they may just blow it on
something and not realizing what to do with
it. So you're supposed to be giving them,
for example, tools for work,
give them shelter, pay for their rent,
give them a car if they need a
car to get around, give them a scholarship
for education, or get them into a program
where they can learn skills so that they
can get a job and they can get
on their own 2 feet. So it's preferable
that if you have the opportunity, instead of
giving cash, you can give one of these
things. Or you give, for example, a a,
grocery store card,
so that you make sure that this is
not gonna be spent on,
you know, some random thing that they don't
need. So it's what whatever you give, as
long as it's preferable that you give whatever
is gonna help them get back on their
own 2 feet because that's what the point
of the zakat is. So number 1, 2
categories, poor and the needy. It's mentioned in
the Quran as 2 categories. I just grouped
it here as one category because they almost
fall in the same group.
Number 2,
people who are employed to collect
Zakah or people who are employed to distribute
Zakah
on behalf of a recognized
Muslim authority, and that's a very important caveat
there. So if someone
is employed to collect the Zakah
or distribute the Zakah,
They are allowed to receive money which is
coming from Zakah. So Zakah is allowed to
be used to fund that, as long as
you're working for a recognized Muslim authority. So
that doesn't mean that all of a sudden
you say, okay, well you know, I'm gonna
go to my friends. Say, don't worry, don't
worry, you know, you give me your Zakat,
I'll make sure it gets distributed,
and I'm, of course, I'm gonna take my
own cut.
You can't do that. Anyone will everyone will
open up shop and say, yeah, this is
my new profession now, you know. You give
it to me, I'll handle it. Has to
be on behalf of a recognized authority so
that there's no abuse in the system.
So if you work for, let's say, an
Islamic state, hypothetically,
even if
you're not considered to be among the poor
and the needy,
you can take a salary
from the Zakah money
because you're helping to redistribute and collect the
Zakah because you're working in that field. Which
means that the institute it's a very interesting
insight here.
The institution of Zakah,
which was primarily supposed to be for the
poor and needy,
in order to make sure that it gets
collected and distributed properly,
Allah has specified in the verse
that you're allowed to take part of it
as your salary
to make sure that the system runs properly.
So in Islam, it's not all about everything
is voluntary voluntary. You know what? Everything should
be charity based. We need 10 volunteers to
help collect zakat, and we need 10 volunteers
to help go and distribute Zakah.
What's gonna happen is the effort
or the system of Zakah is gonna be
all volunteer based.
And if that happens and it breaks down,
it's not gonna function properly.
So what you have now is you have
a system which it becomes inefficient.
So Allah actually said, you can utilize
the zakah money part of it to actually
help
make sure the distribution of zakah is being
equitable and fair and it's running the way
it's supposed to run,
which really teaches us a lot about
the idea of charity,
the idea of nonprofit organizations,
and the idea of, like, you know, volunteers
versus paying for certain work. It's very, very
interesting concept. You could really reflect upon it
more and more.
And the reason why they're receiving
it is because the effort that they're putting
in is preoccupying them from going and working
in another field.
So let's say someone is going and collecting
Zakkah and distributing it and is taking all
it's taking 40 hours a week for them.
They could have gone and worked in another
field, but now they spent their whole week
doing this work. They can't do any of
the other work. So how are they supposed
to make a living?
They took out the time for this, so
therefore they get rewarded from the zakat as
well. But, of course, this is only
allowed when you get exactly the same amount
of money that this type of work would
normally get. So you can't work for a
Zakat organization and say, well, you know, my
salary is a $150,000.
Well, what do you do? Yeah. I redistributes
Zakat, you know, to different places. K.
In America,
doctors make 150 k.
Lawyers maybe make a 150 k. But people
who simply just make phone call and distribute
the car, that type of work is not
valued at that level. So it has to
be at the value in your society
of that type of profession, how much it
actually makes. It has to be on par
with that.
Every job has different values. So it has
to be fair and it has to be
according to the values so that there's no
abuse there. Right? Otherwise, everyone will wanna become
a zakat collector. Right? So, well,
150. Okay. Sign me up.
So they should not be given more than
that and that's according to your culture and
your custom.
Category number 3,
peoples whose hearts need to be softened towards
Islam.
In the Quran it says,
So what does this mean?
People whose hearts need softening towards Islam, this
includes
new Muslims
who are not firm in their commitment to
Islam.
Now today, what we find is people who
are entering into Islam, let's say in in
America, minority, you know,
Muslim minority community,
people who enter into Islam are very convinced
about Islam,
right, for the most part.
They're they know what they're doing. They're getting
into it usually for the right reasons. But
there are places where when Islam is the
dominant
authority, the dominant power,
some people kind of come into Islam like,
if you can't beat them, join them type
of thing. Like, there's some benefits of being
part of the Muslim community, just join them,
but they're not really firm in their commitment.
And one of the reasons why they're not
firm is they want some, like, special treatment
or something like that. And if they get
some special treatment,
they might be more inclined something is kinda
holding them back a little bit. They might
be more inclined to feel more comfortable with
Islam. So Zakah can be used to be
given to those people who will feel a
little bit closer to Islam, kind of remove
some of the barriers for them.
The second category
is people who are inclined
to accept Islam,
but they're afraid that there's gonna be social
and economic sanctions
that would result from them being Muslim.
So let's say someone is coming and really,
really considering Islam, and this is very common,
and their family is like,
has an absolute hatred for Islam, such that
they will literally kick them out of the
house, and this is a 17 year old,
or this is someone who's 30 but they
don't have a job anymore. And they're gonna
be ostracized completely.
Family's gonna kick them out, their whole social
circle's gonna kick them out, their company's gonna
fire them, everything is gonna happen.
You say, well, they're really debating now. Okay.
I know Islam is the truth, but am
I ready for this kind of, you know,
test in life?
So Zakah is allowed to be given to
these people even if they're not in the
category of poor and needy. Because the moment
you give it to them, it will help
give them a sense of security, so that,
you know what, I can do this. So
they're inclined towards Islam, you can go ahead
and give it to them as well. So
zakat can be used for that. And the
last in this category, the hearts needing to
be softened, is there are some people who
try to harm Muslims and they make it
their profession.
And one of the things is if they
were given
special
financial
treatment,
they might stop what they're doing.
If you, you know, because there are some
people, they're just really upset, they hate Muslims,
Muslims. They're causing problems and everything. If you
send them a few gifts or something like
that, there are some of them they might
actually stop because they just had nothing else
to do or whatever was in their mind.
Zakah can be used for that purpose as
well. But, of course, you have to be
very careful.
You don't just go to, like, you know,
mister Bill O'Reilly on Fox News and say,
you know, here's here's a $50,000
gift. Can you please stop making fun of
Muslims every single day on your show? He
probably won't stop,
but that is not the best use of
zakah. Right? So it can be given, but
you have to be very very careful about
this category in terms of how you give
it out. Okay?
So that's,
that's category number 3.
Category number 4
are slaves and prisoners of war.
So anyone who's a slave, who's been enslaved,
or is a prisoner of war, and they
wanna buy their freedom, you're trying to buy
their freedom for them, you can go ahead
and give zakah in order to help them
buy their freedom back. They've been captured by
the enemy,
and you say we're we're ransoming them.
You know, $50,000
per prisoner.
So you can use succah money, which is
like, kinda like the Muslim community has
come, you know, piled up together, and you
can start freeing some of those Muslim prisoners
of war.
So,
when it comes to this category,
it's possible
that someone can make an argument and say,
well,
what about
a,
like a a political prison not a political
prisoner, but what if some what if there's
a Muslim who is being falsely accused of
terrorism charges
or being falsely accused of such and such
charges?
Can we utilize
Zakkaff Funds
to be
to to pay their legal fees, so that
we can actually get lawyers to fight on
their behalf to get them out of, you
know, the situation that they're in? So it's
it's possible
that they might be able to come into
this category, except there's only one problem, and
that is there's uncertainty
that their freedom will be guaranteed or not,
because you're just paying the lawyer
and you they may win the case, they
may not win the case. Right?
So this actually requires a little bit more
research. I think scholars need to put in
more research and more discussion,
into this before coming with a conclusive answer.
Category number 5,
people who are in debt.
So people who are in debt and they
don't have enough money,
even to cover, you know, their necessary expenses,
like house, food, marriage, family, all of that,
you give them enough so that they could
pay off their debt. Because technically, they have
to subtract their debt so they become,
considered to be poor and needy.
Category number 6
is funding the defense of Islam and Muslims.
Okay? Funding the defense of Islam and Muslims,
what we consider Jihad.
Right? So this can be used, zakam money
can be used to support soldiers
who are fighting in the path of Allah
by providing food for them, equipment,
money to take care of their families, all
of these things. Because you have to have,
in a Muslim institution or like in a
Muslim state for example, you have to have
that defense. You have to be prepared for
some enemy coming and trying to take you
over. So zakah can be used for that
as well. And lastly, number 7
by the way, number 6,
it's possible that someone can say, well, what
about intellectual
forms
of jihad? Intellectual forms of defending Islam by
writing articles and media and all of these
things,
combating missionary propaganda and spreading the message of
Islam and combating,
propaganda against Islam.
It's possible to just kinda stretch this category,
but again, I think it needs more research
from scholars before we make a conclusive,
decision on that.
And number 7,
a stranded traveler. So there's a traveler who's
somewhere, and they're stuck in a foreign land,
and they don't have access to their money.
This is incidental poverty. They don't have access
to their money right now, and there's no
Western Union. Nobody can wire them the money,
but they have a lot of money at
home.
They're allowed to be given Zakkiah so they
they can get back to their home, their
place of residence where they have access to
the money. That is very rare nowadays, but
it used to be very common. Someone who's
stranded traveler, wayfarer,
you can give them,
you know, you can give them some Zakah
or you can even give them a loan.
But usually, if you didn't see them again,
the loan wouldn't do much. So these are
the people who can receive Zakah.
Who cannot receive Zakah?
Number 1,
Zakah cannot be given to fund a public
work.
You cannot give Zakah to fund a school,
a mosque,
the money cannot go to the mosque, a
hospital,
a bridge,
streets, something like that. It cannot be paid
for any of these public works,
and it cannot be used for paying the
shroud or the burial of someone who's passed
away because it's not possessed by them. So
Zakat is supposed to be possessed by an
individual.
It's from one person
to another person and they actually have possession
of that money. Whereas these things are not
in the possession of any individual person. Right?
So you you cannot be used to fund
any of these things. So this is something
we should really keep in mind. So
when you're when you're donating to a school
or a hospital or to a mosque even,
you can't just give your Zakah funds, that's
a completely different fund. The Zakah has to
go to the people who fall who fell
into the other categories we just mentioned. So
number 1, you cannot give Zakah, which was
any type of public work. Number
2, non Muslims. So zakah is not to
be given to non Muslims, and the reason
for that
is because they don't pay zakah in the
first place. Zakah is only collected from Muslims,
so it's redistributed back to Muslims. But, of
course, non Muslims can always receive regular charity.
So Muslims who should be learning to be
charitable,
they're they can give non Muslims charity in
any way, shape, or form as long as
it's not in the form of zakah. Because
it makes sense that the people who are
paying in zakah,
guaranteed paying in, they're also the ones who
are gonna be receiving it primarily.
Number 3,
Zakah cannot be given to the dependence
of the person who's paying Zakah.
So what does that mean? It means you
can't give Zakah to your own parents
or your own grandparents.
Right? Because even you say, well, my parents,
they're poor. Well, technically,
if you are giving Zakah and you're rich
enough to give Zakah,
your parents should not be poor because it's
your job to support your own parents. I
know this is not part of American culture,
but in Islamic culture, you're responsible of taking
care of your parents,
and likewise,
you're responsible of taking care of your children.
So you cannot give zakat to your children
or your grandchildren
or even to your wife
because you're responsible as a man to give
to to be taking care of your wife.
You can't give zakat to your wife. Why?
If you give to any one of these,
it's actually coming back to you. It was
your responsibility to take care of them in
the 1st place anyways.
So it's the benefit that you give when
you give zakah cannot come back to you
in any way shape or form.
So I'll give you an example. If you
give zakah to a Muslim organization or to
any organization
and somehow they utilize that Zakah
money, let's say for political cause or whatever
it is, and they print they make some
pens
with their logo on it, and they make
some notebooks,
and they make some coffee mugs as part
of their advertising plan.
And now all of a sudden, you go
and you get that coffee mug as a
as a as a donation as a gift
or whatever. And you're drinking coffee from that
coffee mug every day, but the Zakah funds
were used to fund that coffee mug.
That's from your own Zakah payment.
You're going and benefiting back from it yourself.
You're not allowed to do that. But sometimes
Muslim organization, they don't realize
what they're doing and they're using Zakah money
and then they're giving out these items for
free and you end up using them yourself.
This is definitely not allowed because you're reaping
the benefit back yourself. So when it comes
to something that, you know, is the benefits
coming back to yourself, it's you can't do
that. It's you're not allowed to do that.
However,
if you have dependents,
who are not being taken care of properly,
by people who are in charge of them,
then you can go ahead and give something
to them. So that's one exception. If no
if someone is not being taken care of
properly, you can go ahead and spend it
on them. So let's say, you know, it's
your sister.
Right? It's your family. But your sister, once
she's married, it's not your responsibility anymore, right,
to be taking care of her. It's her
husband's responsibility or whatever it is. But now
she's not being taken care of property. In
that case, you would be able to do
it because it doesn't come back to you
directly, and you're not really responsible over her.
However,
a wife
can actually give zakat to her husband.
Why?
If he's poor,
right,
the the benefit is not really coming back
to her because it's his responsibility
to be taking care of her. It's not
her responsibility
to pay anything from the household.
The man's responsibility in Islam when you get
married. So if the guy gets poor and
he loses his job and he needs some
money, but the woman
got all her jewelry in the bank account
and everything, he says, okay. You know what?
I need to pay zakah.
Who better to pay Zakat than to my
husband who actually needs to support me? He's
one of the, you know, one of the
people who's in need of money. Rather than
getting it from someone else, you can get
it directly. So you're actually allowed to give
Zakat to your husband,
but not to your wife. And if I
were to ask you the question why, you
should be able to answer because the husband
is responsible for supporting the wife and not
vice versa. So the benefit doesn't come back
to you in reality. It's not like some
added benefit that you're getting back. Number 4,
You're not
allowed to give zakah to a person who
is capable of working,
but chooses not to work out of laziness.
Someone who just wants to be a bum
and they just wanna watch TV and they
don't really wanna work, zakah should not be
given to this person. And traditionally, it was
never given in Islamic State. So anyone who's
they they say anyone who's got, you know,
a man generally who's got some muscle, they
can they got some energy, they can move
around, and they could go and start chopping
some trees or doing something,
but they just don't wanna work and you
it's pretty clear they don't wanna work. You
don't give them Zakah because then they're gonna
be defeating the purpose. Zakah is not to
leech off of other people. Zakah is to
get people back on their feet so that
they can become part and parcel of community.
And number 5, zakkah cannot be given to
someone who has a who's a direct descendant
from the bloodline of the prophet, peace be
upon.
Okay? So some scholars said this was only
during the time of the prophet. Others extended
it and said, no. We give special treatment
to the family of the prophet, so we
should be helping them with charity anyways if
they're poor. Not giving them Saqat, but giving
them
general charity. And this is kind of a
way of honoring the prophet. It's not so
much because of the people. It's a way
of honoring and respecting the prophet. Alright. So
generally they're taken care of but just keep
that in mind. So these are the people
you can give Zakat to and the people
you cannot give Zakat to. The last thing
is,
distribution rules and priorities, and then we're done.
The distribution rules are Zakah can be distributed
any way among the categories.
So any of the categories, let's say you
have $5,000
to pay in zakah, you can divide it
however you want. So if you give
1,000 to the poor and the needy, you
give 1,000 to prisoners of war, you give
1,000 to,
people whose hearts need to be softened, and
you give 1,000 for military purposes.
You can divide it in any way you
want,
but you should be careful
to never
neglect
the poor and the needy because they're the
primary recipients. So So if someone says, you
know what? We're gonna put all of our
money
into
helping
fight off the people who are against Islam,
and yet you have so many people who
are poor and needy and they end up
suffering. Never neglect the poor. So just
try to not focus everything in one area
where you end up neglecting the poor. As
long as you're you're taking care of them
because they're the primary recipients.
It is preferable to distribute that money according
to the needs of the Muslim community.
So you have to know what the needs
of the community are. That's why if you
give it to a organization,
they understand these things better and they can
distribute it more equitably. It's recommended,
highly recommended,
that you distribute your zak your Zakat locally.
Why? Because it's collected from the same people.
So the amount of money that you make
in America, if you're sending all of your
Zakat to another country,
the amount of money that's needed to live
over there,
that should actually be taken and the amount
of money that people make in that area,
in the same field,
what should be happening is the people of
that area should be redistributing to the people
of their own locality.
And you, in your area, should be redistributing
to the people of your own locality
because the cost of living
is is is kind of on par with
how much people generally make in a certain
field. So the essential principle is to redistribute
the money of Zakkah back to your own
locality, your own state, your own county, whatever
it is generally. But, you know, what a
lot of people do is they always send
everything back home or to a different country
or something like that. If it's really, really
an emergency, that's a different case.
But we shouldn't make this a habit all
the time. It's also recommended to give to
your relatives first. Doesn't matter where they are.
If they're abroad or not or whatever, your
relatives take precedence
as long as they meet the requirements of
sukha. They are among the category of being
poor and needy.
They are the ones who take precedence and
they should be given that.
You can either give it to the individual
yourself or you can give it to an
organization
that distributes it. My caveat here is
be careful, make sure that you give your
Zakkah to a responsible organization
that does 3 things.
Number 1, they screen fictitious claims because there's
a lot of fictitious claims to Zakkah. So
something someone that screens these claims and make
sure that the people really need this money,
they check for people who don't wanna work,
but they're capable of working, number 1. Number
2, an organization that has minimal overhead.
They don't have excessive overhead. So when they
fly over to distribute Zakah
in,
wherever part of the country, they're not flying
business class or something like that, you know.
They're and using the Zakah money for that.
They're actually using what they need. And number
3,
they're very cautious about how the zakat is
being distributed. So that's I would recommend you
you you have those organizations primarily.
When you're distributing your zakat, you must have
the intention that this is zakat when you're
paying it out. So your intention should be
clear cut that this is Zakah that I'm
paying out. And another note on the side
by the way is, when you're giving your
Zakah
and you have the intention that this is
my Zakah money, your you should not shy
away from taking a tax break or a
tax advantage from this charity that you're giving.
So it doesn't mean that, you know what?
Now that I've given this as zakah, I
shouldn't claim a tax deduction on my taxes.
No. You should because why wouldn't you? Right?
There's no reason that you shouldn't, and it
doesn't decrease the value of your zakah anyways
because the amount of money that you gave
to the poor, it got to the poor
as they need it. So you don't need
to worry about,
claiming tax deduct in fact, you should claim
a tax deduction.
The second thing is you can pay in
advance, like I mentioned, but you cannot backdate
Zakah to something. So you cannot go and
give it,
you know, you you you put some money
in the donation box and you give a
donation to the masjid. And then all of
a sudden you came and you attended the
Zakah seminar and you realize you're not allowed
to give Zakah
to the masjid, and you thought that was
gonna count as your Zakah. You cannot go
and say, oh, okay. I changed my intention.
That actually, that money was my Zakah money.
You can't do that. You can't backdate and
say, oh, that's what I meant to give
Zakah actually.
Right? So if you go and you give
to a charitable you give a person on
the street, let's say let's say there's a
poor Muslim on the street and you give
him $500, and then all of a sudden
next week, it's time to pay Zakah and
you're like, oh,
you know what? I should have counted that
one as Zakat. You can't backdate your intention,
but you can forward date it or you
may have the intention when you're paying.
It is not a requirement to notify the
person that you're giving them Zakat.
You don't have if you're giving it yourself,
you don't have to go and tell someone.
Hey. You know what? Looks like you're in
difficult circumstances. You know, here's some zakah money.
You don't have to tell them. You can
just simply give it to them as a
gift unless they ask you. If they ask
you, you have to you can't lie to
them. But if they if, you don't have
to tell them. You just give it in
the form of here here's some charity or
here's a gift I wanted to give you.
Here's a gift card, and that's it. Because
in some societies, receiving zakat
represents some kind of shame among people, and
you don't wanna, you know, you don't wanna
trigger that in people. So people who are
in need, you shouldn't make them, you know,
shy away from receiving something. Sometimes it's better
to just give it to them, like, here's
a gift for you. Here's a gift card
I have, $200 gift card, to a grocery
store or something. Just, we decided to you
know, we decided we chose this, and we're
gonna give it to you as a gift.
They don't have to know that it's zakah,
but you need to know that this person
is qualified. So as long as you know
that they're qualified for zakah, you can give
it to them, but you don't have to
tell them that it's zakah. If you find
out afterwards
that the person was not eligible for zakah,
it turns out they look like they were
really, really poor, but actually they had this
retirement account of $100,000
or they had this offshore bank account or
something like that, your obligation is still considered
discharge. You don't need to give zakah again
as long as you put in some real
effort to determine whether this person's state is
legit or not. If you didn't put in
any effort at all, then it's your fault,
so you have to go and pay zakah
again.
Zakah can be distributed in any form of
wealth that's gonna benefit the person. So you're
allowed to give medicine to a person who
needs medicine and that counts as a zakah.
So if someone comes and says, look, I
have this medicine, I need this medicine, this
is this is going on, and you say,
you know what? I don't wanna give cash
to this person just in case. I'm gonna
give them
that special medicine that they need. I'm gonna
give them the value of that and give
them the medicine.
You can go ahead and distribute that as
long as it's benefiting them. What you don't
do is you come and you say, oh,
you know what? I need to give Zakah.
Okay. Here's my old piece of junk 486
computer, which no one wants. This has about
$50 value. Yeah. Here here's the computer. Go
enjoy yourself. That's not gonna because they don't
need that. Right? So you have to give
them something that they need,
that's gonna benefit them. And in fact, it's
recommended to distribute it in the form that's
gonna help them the most. So if they
need that medicine and they're gonna go buy
it anyways, you wanna make sure you give
them that medicine.
And lastly,
Zakah is allowed to be paid out in
increments
by a Zakah organization,
who's collected it in order to help the
person manage their wealth.
So
if you know someone and you just give
them a lump sum of $3,000
in zakat, and you wanna help them for
the entire year, get them back on their
own feet, but you know that they don't
have the money management skills,
it's allowed
to take
the 3,000 divided by 12 and just give
them monthly payments. Here's another $300 this month.
There's another $300 this month, and you give
it to them on a monthly basis.
If you're an individual,
right, if you're an individual
remember I said you're not allowed to delay
your Zakat?
So as soon as it's due, you have
to pay it out. If you wanted to
do the same thing and pay it out
on a monthly installments,
you have to literally
if you make the intention and you put
that money aside so it's it's not being
touched at all
and then you're going and giving someone these
monthly payments,
it would not count as your zakah being
late as being delayed because you made the
intention, you put it aside, you you you
targeted a certain person, and you're gonna be
giving them on a monthly basis. That would
be allowed and it would not be considered
a late succah either.