Answered by Shaykh Hamza Karamali, SunniPath Academy Teacher
My question is concerning Zakah. How much money does one have to have
before he is liable to pay zakah? Also how does one determine the
amount? Does one have to pay zakah on money inherited? For example if
one inherited 5000 USD how much would one have to pay? Also if one
neglected to pay this amount for several years what does a person do?
When does a person pay the money?
In the Name of Allah, Most Merciful and Compassionate
I pray this email reaches you in the best of health and spirits. Here are the answers to your questions.
Q1: How much money must one possess before one is liable to pay zakat?
If the amount of money one possesses is greater than the value of 592.9 grams of silver, and one owns this money for more than a lunar year, then it is obligatory for one to pay zakat on it (cf. Reliance of the Traveller).
For example, if the price of silver throughout the year was 0.25 USD per gram, then zakat is only obligatory if one owned 148.23 USD (i.e., 0.25 USD per gram * 592.9 grams) or more throughout the zakat year.
Q2: How does one determine how much zakat to pay?
If zakat becomes due on one’s money as explained above, one must pay 2.5% of the money in zakat. For example, if one owes zakat on 10,000 USD, one would pay 0.025 x 10,000 USD = 250 USD in zakat.
Q3: Must one pay zakat on inherited money?
Yes, one must pay zakat on inherited money, but only after one owns it for a lunar year. If the deceased from whom one is inheriting the money did not pay zakat on the money during his lifetime, one would also have to calculate the amount of zakat that he owed when he died and then pay that amount to eligible zakat recipients as well.
Q4: How would one pay zakat on 5000 USD that one inherited?
One waits until a lunar year passes after one inherited it, and then pays 125 USD (i.e., 0.025 x 5,000 USD) in zakat.
Q5: If one neglected to pay zakat on 5000 USD for several years, what should one do?
One must calculate the amount of zakat that was due each year and pay it immediately. For example, if one owned 5000 USD from Muharram 1420 to Muharram 1423 without paying zakat on it, one would pay zakat as follows.
- At Muharram 1421, one owed 0.025 * 5000 USD = 125 USD in zakat.
- At Muharram 1422, one owed zakat on the original amount minus the unpaid zakat from the previous year, i.e., on 5000 USD – 125 USD = 4875 USD. The amount of zakat due was therefore 0.025 * 4875 = 121.875 USD.
- At Muharram 1423, one owed zakat on the original amount minus unpaid zakat from previous years, i.e., on 5000 USD – 125 USD – 121.875 USD = 4753.125 USD. The amount of zakat due was therefore 0.025 * 4753.125 = 118.828125 USD
The total amount due from previous years is therefore 125 USD + 121.875 USD + 118.828125 USD = 365.71 USD (rounded up for caution).
Please feel free to follow up with additional questions if this is unclear.
And Allah knows best.