Re: Zakaat.
If somebody has money saved up for college, it is fully or partially zakaat-able ?
as far as I know, it is zakaat-able.
You can not exempt money/jewelry from zakat saved for some "future" purpose. Its pretty common in Pakistan where aunties make a gold set and say "aray yee tu main nai Munni k leyee banya hai, is per tu zakat nahi ho gi" - which is wrong.
Re: Zakaat.
You can not exempt money/jewelry from zakat saved for some "future" purpose. Its pretty common in Pakistan where aunties make a gold set and say "aray yee tu main nai Munni k leyee banya hai, is per tu zakat nahi ho gi" - which is wrong.
actually I've heard of that maslaa from an aalim and aunties are right. If Munni is not an adult, and gold set is for her (she is the owner, even though its gifted by the mom), then mom is not the owner so no zakat is due, and munni is a child so no zakat is due either.
Re: Zakaat.
actually I've heard of that maslaa from an aalim and aunties are right. If Munni is not an adult, and gold set is for her (she is the owner, even though its gifted by the mom), then mom is not the owner so no zakat is due, and munni is a child so no zakat is due either.
This is strange. I have heard this also from Aalims (from QTV, HUM TV) and have also read about it that unless Munni is adult, parents are the owner of the set and they should pay zakat
Re: Zakaat.
So if my late dad left some wealth for my daughter, and I am just a guardian till she grows up, would I be paying zakat on that? I really dont think so.
Re: Zakaat.
actually I've heard of that maslaa from an aalim and aunties are right. If Munni is not an adult, and gold set is for her (she is the owner, even though its gifted by the mom), then mom is not the owner so no zakat is due, and munni is a child so no zakat is due either.
I've seen many an aunty "gift" many a set to their child to take advantage of this.....
Re: Zakaat.
So if my late dad left some wealth for my daughter, and I am just a guardian till she grows up, would I be paying zakat on that? I really dont think so.
Being guardian (of someone else's wealth for someone else) is different than being owner and then gifting it.
Re: Zakaat.
Being guardian (of someone else's wealth for someone else) is different than being owner and then gifting it.
How come?
If I gift you some gold, will I still be required to pay zakat on that? Why gifting to a minor should be treated any diff than gifting to an adult?
Re: Zakaat.
Confusion city. Ain't it ?
I guess unless it is a huge hardship, it is better to pay up. :)
Re: Zakaat.
In a report by Abdullah bin Amr bin Aas (raa), he related that a woman came to the Messenger of Allah with her daughter. On the daughter’s wrist were two heavy gold bracelets. The Messenger asked her, “Do you pay Zakat on this?” She replied, “No.” The Messenger said: “Would it please you that Allah will encircle you with two bracelets of fire?” The reporter commented that she took them off and threw them down in front of the Messenger, and said: “They are for Allah and his Messenger.” (Ahmed, Tirmidhi).
Baqi Allah knows the best
Re: Zakaat.
Any gains in retirement accounts are not realized income or wealth.
In my view, Paying zakat on any gains for that year is fine as long as then you subtract the costs including fines, higher taxes etc that you would face if you were to take that money out.
I asked our local Alim/Imam in Isha last night, who is a graduate from Jamia Darul Uloom Karachi in the area of Takhassus Fil Iftaa, Islamic Jurisprudence and had been a diligent student of Mufti Rafi Usmani, elder brother of Mufti Taqi Usmani.
His views about 401K ware that you are responsible to pay zakaat on the amount you own in 401K. So, if the total saving in 401K is, let's say 20,000 but if you were to take out that money now, the penalty, taxes and any overhead you have to pay on it, needs to be subtracted and the zakaat is calculated on the remaining balance not the actual balance.
Re: Zakaat.
Wow, that is going to put a big dent in people's finances who have a lot of money in such funds and were not counting it as money they have access to or own yet.
I am sorry but the mufti needs to understand how 401k function better. Zakat is on wealth, 401k is not real wealth it's value can change when you actually withdraw it based on your tax bracket and the tax rate at that time. Additionally how it performs during the time period prior to withdrawal is not predictable.
If we go back in time and say someone should have been paying zakat on their 401k balance minus any taxes and withdrawal penalties and then the value of the portfolio dropped by half in 2008-2009 timeframe when they retired and had actual access to the funds then they overpaid quite significantly. My view although I am not a mufti but a mufta is that no zakat is due until you actually have the funds whether early withdrawal or at regular withdrawal time.
The big challenge I see is that of logic when it relates to 401k and also mortgages. Some scholars say no tax on 401k until u actually have use of it, some have formulas as noted, others say 401k are basically haram, even if you are all in stocks and not bonds because stocks may be for companies with some threshold of interest. So do you pay zakat on haram money? :-)
Then the mortgage question is handled quite opposite, many scholars will not let you deduct the mortgage debt liability.
Anyway yet one more interesting thing I read was that the zakat should be given in your own area, city, state/province etc before looking elsewhere. That kinda messes up the whole angle of ppl sending zakat to Pakistan when there is a need right here. What are people's thoughts about this point?
http://www.icnef.org/index.php?option=com_content&view=article&id=134&Itemid=79&news_id=226
One group that considers 401k exempt. Point being there is no one consistent view. While I see that majority of opinion seems to be to use the formula noted earlier, I am unsure if people fully understand the issue financially. Because then when we flip it and say that defined benefit pensions have a value and can be considered asset but you have not retired yet, then the answers get goofy.
Zakaat.
I agree with X2. 401K is more of a promise and not real wealth and based on how when you withdraw it, it's real value can change.
Problem is not with ulema who are passing he fatwa, problem is with us who are not giving these ulema right info.
D6C, in the Hadith you quoted, it does not show that the little girl was the owner of the jewelry. In fact because mother gave it to prophet, it clearly shows that the mother was the owner and girl was just wearing it
Tlk no the problem is not with us, someone should not pass a fatwa unless they themselves have knowledge or are working with someone who is a noted expert bringing functional knowledge only to the table.
The expertise would vary based on topic, doctors for things lokevIVF which were considered not allowed and still frowned upon by some, financial experts for investments wtc etc.
The challenge is that often times fatwas are made by ppl with some level of religious education but little or no background in the functional matter at hand, or such a person is supported by a functional expert with Little or no Islamic law expertise but an opinion regardless and it influences the scholar.
Functional expert to just provide facts and religious expert to then make a call, it then should be better by a committee of peers and argued.
I am still interested in the whole point on zakat should be as local as possible unless it's to family. Is that correct?
What does that do to zakat ppl pay to different charities targeted for different countries.
Re: Zakaat.
As far as I know, you have heard right. i.e it should be family first and then as local as possible.
interesting read
“Zakah is a basis for achieving social solidarity in the Islamic countries. Such fact should be used when displaying the facts and fundamentals of this true religion. Zakah money should be used in liberating any Islamic occupied territories. Zakah should originally, as confirmed by the Prophet’s Sunnah and behavior of his Companions, be distributed among the poor living in the region from which Zakah money is collected. Extra funds can be transferred to another town. This excludes the conditions of famine, disasters, and worse living conditions, where it is a must to transfer the Zakah money to those who need it most whether groups or individuals.”
Re: Zakaat.
I have a little off-topic question about stocks or bonds in 401k funds.
So some Muslims stay away from fixed/stable value options (bonds/money market funds etc.) because of interest and have all their money in volatile stocks.
When it is time to retire, the market crashes and their retirement fund evaporates in thin air.
What to do ?
Re: Zakaat.
I am sorry but the mufti needs to understand how 401k function better. Zakat is on wealth, 401k is not real wealth it's value can change when you actually withdraw it based on your tax bracket and the tax rate at that time. Additionally how it performs during the time period prior to withdrawal is not predictable.
If we go back in time and say someone should have been paying zakat on their 401k balance minus any taxes and withdrawal penalties and then the value of the portfolio dropped by half in 2008-2009 timeframe when they retired and had actual access to the funds then they overpaid quite significantly. My view although I am not a mufti but a mufta is that no zakat is due until you actually have the funds whether early withdrawal or at regular withdrawal time.
The big challenge I see is that of logic when it relates to 401k and also mortgages. Some scholars say no tax on 401k until u actually have use of it, some have formulas as noted, others say 401k are basically haram, even if you are all in stocks and not bonds because stocks may be for companies with some threshold of interest. So do you pay zakat on haram money? :-)
Then the mortgage question is handled quite opposite, many scholars will not let you deduct the mortgage debt liability.
Anyway yet one more interesting thing I read was that the zakat should be given in your own area, city, state/province etc before looking elsewhere. That kinda messes up the whole angle of ppl sending zakat to Pakistan when there is a need right here. What are people's thoughts about this point?
Totally agreed with the last part. Zakat's first implementation is local. But if you send it out to some deserving person/s in the relatives overseas, it's also recommended because kins and relatives are supposed to be first choice.
Regarding 401K, the mufti (as opposed to mufta like you said:D) was of opinion that zakat is due on any wealth/assets you have at the end of the year regardless if the value fluctuated during the year as long as you are sahib-e-nisab. In this case, you would calculate the current value of 401K when taking out the zakat. It's bound to change just as your wealth in the bank changes over the year but you take zakat out of the total available at the end of year.
Of course, your opinion has own reasons and I am providing a point of view that I felt made more sense to me.
Re: Zakaat.
Sabar 