When I pay my yearly 2.5%, what if I have $10,000 in assets or cash?
But I owe $8,000 on credit card debt
Do I pay taxes on $10,000 or only on $2000?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
In principle, Zakah is due on all Zakatable wealth after deducting one’s liabilities. Zakatable wealth includes cash, gold, silver, and business stock.
You state that you have an $8,000 credit card debt. You may only deduct the principle amount and not the charged interest amount.
For example, if the principle amount due is $7,500 and the interest amount is $500, then only $7,500 would be deducted from the Zakatable wealth and not the entire $8,000. Hence, if one has Zakatable wealth equal to $10,000, Zakah is due on $2,500.
And Allah Ta’āla Knows Best
(Mufti) Abdul Azeem bin Abdur Rahman
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