Giving earned interest to charities and others : paying interest to charity

Fatawa Question

[Question one] : Dear Dr Kahf : I have a question and I appreciate your help with an answer I have currently a retirement account (SEP type) and because of the market status I have it all in a money market account. I want to get rid of the interest given in that account on a yearly basis, what I am planning to do is to withdraw that amount from the account and pay taxes and penalty on it and then dispose of the rest to charity, is this the right way to do it or I have still to dispose of an equivalent amount to the interest paid without deducting the amount that is going to the taxes and penalty. Also do I have to get the amount that I need to dispose of from the account or I can pay it out from other source ? Thank you much [Question two] : Dear brother But if I am going to pay the amount of interest to charity from other sources, then I have to estimate the amount that is going to be charged for taxes and penalty to be able to figure out the net amount of interest that I need to dispose of. Please note that there is no way to avoid the taxes and penalty when withdrawing the amount from the account. So what should I do if I elected to pay that interest from other sources, do I pay the full amount or pay the estimated amount after taxes and penalty ? Housam

Fatwa

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Publication Date

2009-10-15

Main Subjects

Financial and Accounting Sciences
Religion
Islamic Studies

Topics

• Islamic jurisprudence
• Kindness
• Costs
• Wages
• Usury
• Charity
• Payments

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-729918

• APA
• MLA
• AMA