I live in US. I was told that the interest earned on the money that is kept in banks can be given to poor without expecting any reward for that. So I have been giving all the interest money to poor in Pakistan. However that interest money at the end of the year is added to overall income and taxes need to be paid on that interest money. My question is that can I use part of that interest money to pay off the income taxes because the only reason I am getting that interest is to help the poor. I am not using that interest money for myself at all. Also second question is that is it permissible to intentionally place money in an interest earning account for the only purpose of helping poor with that money.
1. Taxes charged for interest earned may be offsetted with interest money.
2. It is not permissible to deliberately earn interest. Poor people may be
assisted with zakaat funds.
And Allah Ta`ala Knows Best.
Mufti Ebrahim Desai