Method of Calculating and Paying Khums

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If the year passes and the khums that must be paid is determined, it is not permissible for the mukallaf to dispose of or use their property until they actually pay the khums. This is because the funds are jointly owned between them and the owners of khums (the Imam (p) and the needy sayyids). Thus, it is not permissible to dispose of or use co-owned property without the permission of the partners. Once they pay the khums, they retain the right to dispose of or use their property as completely halal and wholesome.
Khums is an obligation among the acts of worship (‘ibadat). Therefore, the intention of seeking proximity to Allah Almighty (niyyat al-qurbah) is obligatory at the time of paying it.
It is not sufficient to calculate and merely set the khums aside and place it somewhere; rather, it must be delivered. This is achieved either by delivering it to the religious authority directly, or through his legal representative, or by obtaining permission to spend it on its contextually prescribed religious avenues.

Paying Khums from Other than the Distinct Asset, and Paying the One-Fourth

When khums attaches to a distinct asset, it is prohibited to dispose of or use it before paying its khums because the mukallaf here does not own this distinct asset alone. Rather, they have co-owners in it who are the owners of khums (the Imam (p) and the needy sayyids of Banu Hashim). They own one-fifth and he owns four-fifths of these distinct assets. So, how does one pay khums on a distinct asset?

Answer: The mukallaf has the choice to pay the khums from the distinct asset itself if possible. For instance, if khums is due on ten books they possess, they have the choice to deliver two of them to the jurist or to pay their equivalent in cash. If that is not possible, such as if it was a single asset like real estate, a plot of land, garment, book, artwork, furniture, or a carpet, and other similar things, then they pay its equivalent in cash according to the current actual value. However, in some cases, it becomes necessary for the mukallaf to pay 25%, meaning 1/4, instead of 20%, which is 1/5, in the event that the wealth has not had khums paid on them or are funds to which khums does not apply, like inheritance, for example. This is what the mukallaf must pay attention to so that their liability is cleared during their calculations. Here are some examples:

If a woman owns gold jewelry worth $1,000, excluding the dowry, and it exceeds her annual living expenses or her status, then khums, which is $200, is due on it. But she may not prefer to pay $200 from the substance of the jewelry itself; rather, she wishes to pay its equivalent in cash from the monthly salary she receives from her job. Since the jewelry remained in its state until the annual due date arrived, it is obligatory to pay khums on this $200 out of the cash that was delivered to the religious authority, because the equivalent [cash] is actually present and unspent, unused, or outside of her social standing. If she pays the khums on the $200 (which is $40) and the distinct asset remains as it is until the subsequent year, and the year after, a third, and a fourth, then it is obligatory to pay khums on the $40 as well for the same reason. And so it continues as long as the distinct asset continues. Hence, we find by calculating the khums of the jewelry for four years, for example, during which the distinct asset remained and what was paid was cash, that the sum total of what was paid reached approximately $249.60, which is close to one-fourth of the value of the distinct asset from the beginning. From this, the meaning of paying one-fourth becomes clear, and why it is necessary to pay one-fourth from the beginning and not one-fifth.
If the mukallaf owns land that is not part of annual living provisions, and khums has become due on it. It is natural that they will not cut 20% of the land to deliver it to the religious authority. Instead, based on what is practical for such a case, they try to pay its equivalent value from cash available to them. Thus, the religious authority or his representative performs a process of mudawarah (transferral) to transfer the khums of the distinct asset into a general liability upon them and possibly convert it into easy-to-pay installments. In reality, that 20% portion of the land remains exactly as it is, corresponding to the amount converted into a financial liability through cash payment and the shift to an installment-based arrangement. This implies that the cash itself also requires the payment of khums, so that the mukallaf may fully discharge their khums obligations regarding these assets. That is, they pay the khums of the 1/5 if the annual due date arrives and the land remains as is and unspent on annual living provisions. Therefore, knowledgeable believers must pay attention to the necessity of paying 25%, meaning the one-fourth, for such land that will remain for years without being used for annual living provision. In such cases, from the very beginning, it is not sufficient to pay one-fifth. Or they may pay the one-fifth but from wealth on which khums has already been paid or wealth in which there is no khums, like inheritance, for example.

Settlement (Al-Musalahah) and Transferral (Al-Mudawarah)

Definition of Settlement:

“Settlement” means executing a contract between the mukallaf and the religious authority regarding wealth about which the mukallaf doubts whether khums has become due on it or not. If the mukallaf finds wealth and doubts whether they are funds whose khums they paid previously or they are new profits on which khums is obligatory, then they would execute a settlement between themselves and the religious authority to clear their liability. This is what happens among partners when their funds are mixed and no one has knowledge of the exact right of each one of them. So, they settle on a specific amount regarding the doubted matter to protect everyone’s rights and clear their liability.

Therefore, settlement takes place in cases of doubt only. It does not take place when khums due on a certain wealth or property is known. Settlement is not for the sake of canceling khums, but rather to obtain a clearance of liability, so pay attention!

Amount of Settlement:

If the mukallaf doubts whether a particular distinct asset, such as a carpet, a set of dishes, or a piece of gold (excluding the dowry) had its khums paid when the annual due date arrived or not, the ruling for the obligation of settlement in this case is based on the degree of the mukallaf’s probability regarding khums being due on that wealth or property. If the distinct asset’s value is $1,000, and they have a 70% doubt that it is from their current year’s profits, the representative settles on that 70% value. So, the khums of $1,000 is $200, and 70% of $200 is $140 (i.e., the proportion commensurate with the degree of their doubt). Thus, they would pay $60 only (i.e., the proportion commensurate with the degree of their surety).

Question: If a mukallaf observes two representatives, one strict and the other lenient in calculation, is their liability cleared if they choose the more lenient representative?

Answer: It is not the role of the representative to calculate the khums for the mukallaf; rather, it is the duty of the mukallaf themselves to learn the religious ruling and apply it personally, even if it is done with the help of a trustworthy expert accountant, to clear their liability.

Definition of Transferral:

Transferral (al-mudawarah) is a method to transfer the khums obligation from distinct assets into a general liability upon the mukallaf. If khums attaches directly to a distinct asset and the mukallaf is unable to pay it immediately, or needs it for their business such that paying it immediately causes severe hardship, they perform a transferral with the religious authority or his representative.

The way this is done is by the mukallaf delivering the khums to the representative with the intention of proximity to Allah, and then the representative lends that amount back to the mukallaf to be repaid either as a lump sum or in gradual installments. In this way, the khums obligation is transferred from the distinct asset to the general liability of the mukallaf.

Avenues of Transferral:

Transferral is restricted to cases where immediate payment would cause severe hardship (huraj). Otherwise, there is no justification for it, nor is there permission to delay payment.

Question: Is a transferral valid if the mukallaf hands a check to the representative, and the representative then lends it back?

Answer: Receiving a check is not considered receiving actual money such that it can be loaned out, except if the check ceases to be a mere document and becomes currency by customary standards.

Benefits of Transferral:

It permits the mukallaf to dispose of or use the distinct asset on which khums has become due, as immediate use would otherwise be prohibited due to the co-ownership of the recipients of khums (the Imam (p) and the needy sayyids).
It exempts the mukallaf from paying khums on any increase in value that occurs after the transferral, provided the asset is not designated for trade.
It ensures the validity of their prayers, circumambulation, food, and clothing that were otherwise liable for khums.

Paying khums for the First Time

For various reasons, such as ignorance or procrastination, some individuals may fail to fulfill the religious obligation of paying khums. Upon realizing this religious duty, they find themselves in a state of religious hardship, desiring to rectify past omissions and embark on a fresh, spiritually purified financial life. What, then, is required of them, and how is the process of settling these accounts carried out?

A mukallaf intending to pay khums for the first time must set aside the wealth they have owned over the past years, examine them item by item, and apply the khums rulings, as previously explained in earlier chapters of this book, to each one. They should proceed as follows:

Identify their marja al-taqlid, since jurists have differing views on certain exceptions like gifts or inheritances.
Review all wealth owned from birth until the present time, examining how they were acquired and when they were used for annual living expenses or provisions.
Categorize themselves into one of the following two groups:

A. Category One: Mukallaf who does not have work refers to students, housewives, etc. They divide their historical wealth/property as follows:

Something acquired through anticipated inheritance or dowry – No khums is due.
Something acquired through loans:
1. If spent on their living provisions or it was destroyed and then the loan was repaid, then no khums is due.
2. If the loan was repaid and a year passed before the asset was used or destroyed, then khums applies.
Something acquired through trade, donation, and gifts; there are different types:
1. Wealth known to have remained for a full year without being spent on living expenses, khums must be paid, whether still present or destroyed.
2. Wealth or property owned throughout the years and used for personal needs, such as a house, car, or furniture, before a full year has elapsed since their acquisition are not subject to khums.
3. Wealth or property for which khums being due is doubted because how it came into their ownership is doubted (i.e., was it inheritance or trade). No khums is due.
4. Wealth or property where there is doubt as to whether they were purchased using the profits of the year of usage for living expenses or the profits of previous years, the obligatory precaution is to reach a settlement with the religious authority based on the degree of probability of each scenario.
5. Wealth acquired that was subsequently lost/destroyed, but the mukallaf thinks there is a possibility that they were lost/destroyed on other than daily living provisions. The obligatory precaution is to reach a settlement with the religious authority (al-Hakim al-Shar‘i) based on the degree of probability.
6. Wealth spent on annual living expenses and doubts whether the expenditure occurred before or after the completion of the year, the obligatory precaution is to reach a settlement based on the degree of probability.
7. Wealth for which there is doubt whether one year has elapsed, the obligatory precaution is to reach a settlement based on the degree of probability.

B. Category Two: Mukallaf who has work, this refers to employees, merchants, and laborers. They divide their lives into two phases:

Phase 1 – Prior to employment: The same rules apply as the cases and scenarios mentioned above regarding those with neither a profession nor a job.

Phase 2 – First, the mukallaf assigns the date on which they started working, and this date serves as their annual due date. Then, they assess the wealth that came into their ownership after that date until the next annual due date, repeating this year after year. Based on this:

If they came to own it through inheritance or dowry, then khums is not due on it.
If they came to own it through loan:
1. If they used it for their annual living expenses or it was destroyed, and then they repaid the loan, then there is no khums due on them.
2. If the loan was repaid and a year passed over the profits with which the loan was repaid, and then they utilized the distinct asset for their annual living provision or it was destroyed, then khums is obligatory on it.
If they came to own it through trade, gifts, donations, or salary, then it is divided into several categories:
1. Any amount of money or distinct asset that passed its annual due date, as well as the second and third years up until the year when khums is paid, without it being used for annual living expenses during the specific khums year of its acquisition, must have its khums paid, whether it remained after that or was destroyed or lost.
2. Wealth that one came to own during the course of the year and used
  before the arrival of the annual khums due date, then khums is not obligatory on it.
3. Wealth about which one doubts whether khums has become due on them because they doubt whether they came to own them through inheritance or a dowry (mahr), or owned them through trade, for example, then khums is not obligatory on them.
4. Wealth/assets about which one doubts whether they purchased them with the profits of the year of their use for annual living expenses or with the profits of previous years, then based on obligatory precaution, a settlement (musalahah) must be made based on the degree of probability with the religious authority.
5. Wealth that one acquired and was destroyed, but it is possible that they were destroyed, lost, or wasted on non-living expenses, then based on obligatory precaution, a settlement must be made based on the degree of probability with the religious authority.
6. Wealth that one spent on their annual living expenses but doubts whether that spending occurred before the end of the year or after it, then based on obligatory precaution, a settlement must be made based on the degree of probability.
7. Wealth about which one doubts whether a year has passed for them, then based on obligatory precaution, a settlement must be made based on the degree of probability.

Question: What if the mukallaf does not remember when they started working, or doubts whether everything they own was acquired before or after the due date. How should they determine khums for the past years?

Answer: They estimate the minimum amount they are certain of for the annual surplus over annual living expenses for each year and pay its khums, and based on obligatory precaution, a settlement (musalahah) must be made based on the degree of probability regarding the portion of the annual surplus that is in doubt. For example, if what one is liable for is determined to be $100,000, and all of those doubts occur to them, and the degree of their doubt is 50%, then they must pay the khums on the first half, which is $10,000, and the religious authority or his representative reaches a settlement with them regarding the other half, so that it can become waived for them.

Subtle dependencies

Many people may not pay attention to subtle matters to which khums applies, which requires us to draw attention to them. This is especially true of some of the believers with limited incomes who think that they are exempt from khums under the pretext of limited income, or even the misconception that the designation of poverty applies to them since they do not actually possess their annual living provisions. However, with a little precision and investigation, it becomes clear that it is rare for a mukallaf to be completely exempt from khums. For example, in our contemporary era where it is rare for a person not to own at least one bank account, if one were to review their records for a single year, their bank balance would certainly not have dropped to reach $1, for instance; consequently, it is obligatory to pay khums even on this $1. From here, we mention and draw attention to some subtle matters that are expected not to be overlooked during the calculation process:

Non-permissible Expenditures: If it happens that the mukallaf spent their money on a religiously forbidden matter, such as buying a digital card containing music that is forbidden to listen to, or spending money and traveling a journey of disobedience to attend a gathering where forbidden acts happen and it is not permissible for them to attend, and similar things, then such expenditures, when made outside their religiously sanctioned scope, are subject to khums.
Fuel and Storage: It happens that a quantity of firewood prepared for winter heating is stored and may exceed the need, so some of it remains for the winter of the second year. As long as it retains a market value, it is obligatory to pay khums on it upon the arrival of the annual khums due date. Likewise, if the annual due date arrives while the gas cylinders in the house are unused, or if the car’s fuel tank was filled a few nights before the arrival of the annual due date and remains filled, then their market value must be included within the khums calculation process.
Digital Financial Cards / Store Credits: It happens that many companies intentionally return buyers’ funds upon the return of purchased goods, or when granting shopping rewards, or when facilitating the preparation of purchasing gifts for friends and loved ones. Or an airline may grant such a digital credit with a specific financial sum in return for giving up one’s seat for another delayed flight, enabling the traveler to purchase another ticket or upgrade with that sum to a first-class seat, for example, and similar things. As long as these are considered in the view of customary norms (‘urf) to possess a financial value that enables the holder to use them for purchases, the mukallaf must pay attention to the necessity of paying khums on the value present in such digital credits if the annual khums due date arrives and they have not used them.

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