Zakah on debt.
Mu' meneen Brothers and Sisters,
As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)
One of our brothers/sisters has asked this question:
As-salaamu alaikum wa rahmatullahi wa barakatahu,
I have an urgent question that needs your urgent attention and reply, please. We have some debt that is due in November of this year, we are trying to calculate our Zakat. Should we deduct that amount before calculating the zakat? Or should we calculate the zakat before paying the credit card debt....which is interest free if Inshallah paid by November. Also how do we pay zakat on our 401K retirement which we cannot withdraw now. Pleased advice on how do we go about calculating this.Do reply ASAP.
(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)
Zakah on debt
In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.
Your Question: .We have some debt that is due in November of this year, we are trying to calculate our Zakat. Should we deduct that amount before calculating the zakat?
There is no zakah liable on the debt on has taken in Shariah. Thus lets say your excess assets are worth $10,000.00 and you have a debt which you need to repay of $2,000.00. Thus for the year you will only be liable to pay zakah on $8,000.00 (10,000 2,000) at the rate of 2.50%.
Your Question: ..Also how do we pay zakat on our 401K retirement which we cannot withdraw now. Pleased advice on how do we go about calculating this.
A 401k retirement plan should be treated like any savings plan, and zakah should be paid annually on the total amount one has contributed to this retirement plan.
For example, the first year you contributed $1,000.00 to the 401k retirement plan.thus the zakah for the first year would be 2.50% of $1,000.00.
The second year you again contributed $1,000.00 to the plan, thus the zakah for the second year would be 2.50% of your total contribution, which is $2,000.00.and so on.
Whatever written of Truth and benefit is only due to Allahs Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.
Your brother and well wisher in Islam,