Zakat is one of the five pillars of the Islamic faith, requiring those who possess over a certain amount of money to donate a portion of it to those in need. It is considered a form of Sadaqah, which means completing a charitable act. Fulfilling these duties helps to bring you closer to Allah and purifies your soul. When determining the amount of money to give to a Muslim charity, Zakat can be confusing to calculate. However, it is important to figure this out in advance, to help you better plan for the eventual donation.
What is Nisab and What is its Current Value?
The first step in using a Zakat calculator is to determine the Nisab, or the cut-off amount. People who have personal wealth that exceeds Nisab owe Zakat. Those who with personal wealth below that of Nisab do not owe Zakat. Nisab is the cash equivalent of either 3 ounces or 87.48 grams of gold or 21 ounces or 612.36 grams of silver. Currently, the accepted value of one gram of gold is $68.37, and the accepted value of one gram of silver is $0.74.
What is Zakat Due?
The day your personal wealth surpasses the Nisab threshold, you should calculate your Zakat. It must be paid after the completion of one lunar year. Most people pay Zakat during Ramadan, though this is not mandatory. If you do not plan on paying Zakat right away, it is a good idea to make a note of your Zakat anniversary, so you do not forget to pay.
What Assets Are Included in Your Calculations?
Not everything you own should be included when you calculate the amount of your wealth. Zakat is not based on what you need to survive, but instead the surplus. Anything above and beyond what is required to sustain you and your family is what your charitable contributions are based on.
When you start to calculate your assets eligible for Zakat, be sure to remove certain essentials, such as your home, your car, clothes, and any equipment that is necessary for the continuation of your business. Assets that should be included are income properties, stocks and bonds, savings accounts, and business income.
Once you calculate your assets, you can start to subtract your debts. When you add up the amount of your debts, do so looking at your monthly obligations. This includes debt owed for schooling, credit cards, personal loans, and car payments. Calculate how much you owe to creditors on a monthly basis. Next, multiply it by 12 to arrive at your debts. Subtract them from your assets to determine your Zakat net worth.
How to Calculate Zakat
Using the Nisab rates and the accepted value of gold or silver, you can easily calculate the Nisab, which in turn helps you determine the about of Zakat you owe. For example, using the accepted value of gold:
If your personal wealth is more than $5,981, you owe Zakat. Anything that exceeds $5,981 is your Zakat net worth. You must donate a minimum of 2.5 percent of your Zakat net worth. For example, if your Zakat net worth is $10,000, you owe a minimum of $250. If you are able to donate more and still live comfortably, you are encouraged to do so.
Once you have calculated your total Zakat payable and are ready to make the payment, you need to find a reputable, faith-based charity that is able to receive your donation. You should focus on finding one that is registered as a non-profit charity. There are numerous options for charities; including international, national, and local options. You should take some time to think about where you want your funds to and who they are to help. For example, if you have a personal interest in developing the Muslim community in your neighborhood, you should opt for a local charity. Conversely, if you want to help those less fortunate in other countries, an international foundation is ideal. If you are looking for a convenient way to pay Sadaqah online options are available. Online options make it easy for you to find a charity with goals that align with your own values and morals.