Zakat Calculator 2020 Usa

Zakat is an obligatory charity in Islam that must be paid by eligible Muslims who meet certain financial thresholds. In the USA, calculating your Zakat obligation involves determining your total savings and wealth, then paying a fixed percentage of that amount to qualified recipients.

What is Zakat?

Zakat is one of the Five Pillars of Islam, alongside Shahada, Salah, Zakat, and Hajj. It is a mandatory charitable contribution that Muslims must fulfill annually if they meet the financial requirements. The word "Zakat" comes from the Arabic root word meaning "to purify" or "to grow."

Purpose of Zakat

The primary purposes of Zakat are:

To purify wealth and remove the element of riba (interest)
To redistribute wealth to those in need
To promote social justice and equality
To strengthen the bonds of the Muslim community

Who is Eligible to Pay Zakat?

Zakat is obligatory on Muslims who meet the following criteria:

Must be of sound mind
Must have reached the age of puberty
Must have sufficient wealth to meet the nisab threshold
Must have owned the wealth for at least one lunar year

Important Note

Zakat is not a tax but a religious obligation. It is not collected by governments but is given voluntarily to those in need according to Islamic principles.

Zakat Rules in the USA

In the USA, Zakat is not legally required or enforced by the government. However, many Muslim communities and organizations follow Islamic principles when calculating and distributing Zakat. Here are the key rules for Zakat in the USA:

Nisab Threshold

The minimum amount of wealth that must be owned to be eligible for Zakat varies by country. In the USA, the nisab is typically calculated based on the value of 85 grams of gold or its equivalent in cash and savings.

Zakat Rate

The standard rate of Zakat is 2.5% of one's total savings and wealth that exceeds the nisab. This amount is then distributed to eligible recipients.

Exemptions

Certain types of wealth are exempt from Zakat, including:

Wealth used for daily living expenses
Wealth given as charity
Wealth used for business purposes
Wealth owned by non-Muslims

Zakat Formula

Zakat = (Total Wealth - Exemptions) × 2.5%

How to Calculate Zakat

Calculating your Zakat obligation involves several steps. Here's a step-by-step guide:

Determine your total savings and wealth
Subtract any exemptions from your total wealth
Multiply the remaining amount by 2.5% to get your Zakat obligation
Distribute the Zakat to eligible recipients

Common Types of Wealth for Zakat

Wealth that is subject to Zakat includes:

Cash and bank savings
Investments and stocks
Real estate and property
Business assets
Gold and precious metals

Eligible Recipients

Zakat can be given to the following groups:

Poor Muslims
Those in debt
Struggling Muslims
For the cause of Allah

Important Consideration

Zakat must be given to those who are truly in need and who will benefit from the charity. It should not be given to those who can afford to pay it back.

Example Calculation

Let's look at an example to understand how Zakat is calculated. Suppose you have the following assets:

Bank savings: $50,000
Investments: $30,000
Real estate: $200,000 (exempt)
Gold: $10,000

First, we calculate the total wealth: $50,000 + $30,000 + $200,000 + $10,000 = $290,000

Next, we subtract the exemptions (in this case, the real estate is exempt): $290,000 - $200,000 = $90,000

Then, we calculate 2.5% of the remaining amount: $90,000 × 0.025 = $2,250

Therefore, your Zakat obligation in this example is $2,250.

Worked Example

Total Wealth = $50,000 (savings) + $30,000 (investments) + $200,000 (real estate) + $10,000 (gold) = $290,000

Exemptions = $200,000 (real estate)

Zakatable Amount = $290,000 - $200,000 = $90,000

Zakat = $90,000 × 2.5% = $2,250

Frequently Asked Questions

Is Zakat required in the USA?: Zakat is not legally required in the USA, but many Muslim communities follow Islamic principles when calculating and distributing Zakat.
What is the nisab for Zakat in the USA?: The nisab is typically calculated based on the value of 85 grams of gold or its equivalent in cash and savings.
Who can receive Zakat?: Zakat can be given to poor Muslims, those in debt, struggling Muslims, and for the cause of Allah.
How often is Zakat paid?: Zakat is paid annually, during the month of Ramadan or at the end of the lunar year.
Can Zakat be paid in installments?: Yes, Zakat can be paid in installments over the year, but the total amount must equal the annual obligation.