Assignment (2)

 Course Name: Tax and Zakat Accounting Student’s Name: Course Code: ACCT 422 Student’s ID Number: Semester: summer CRN: 50398 Academic Year: 1443 H

For Instructor’s Use only

 Instructor’s Name: Rabab Farrash Students’ Grade:           /10 Level of Marks: High/Middle/Low

Q.1

It is possible that putting your things up for sale can give you a better idea of their resale.         Make a list of everything you have and what you plan to do with it. You have left out essentials that you use daily (Shabbir,2018). Assets like your principal property or apparel are not included in your zakat total.

• Analyze the total amount of debt you’ve accumulated. Your net worth will plummet if you owe money on credit cards, student loans, or other obligations. Your zakat-eligible assets will be reduced if you have outstanding debts.
• Use this calculator to figure out how much Zakat you’ll have to pay. Identify your zakat-eligible assets by removing your financial obligations.

Q.2

A zakat tax of 2.5 percent should be applied to all cash and bank balances in your savings, current, and money market accounts. A bank account, for example, would be an excellent place to keep all of your money for the year. The account balance fluctuates most commonly because the user’s needs change.

Steps

Zakatable Wealth can be calculated by summing together all of your sources of income and current needs and expenses to see if it exceeds the Nisab threshold limit. Determine the amount of Zakat you must pay and then do so.

1. 3

Formula

AGI= GI- DEDUCTIONS FOR AGI- ID

=Taxable Earnings

x Rate of Taxation

= Taxpayer’s Tax Liability.

-Incentives and Prepayments for Taxes

= Tax Owed OR Tax Refund (Repetti,2019)

Items that can be categorized as Itemized deduction

Interest rates on mortgages and equity credit lines; uninsured dental costs; interest rates on mortgage lines of credit; and the price of long-term care.

References

Repetti, J. R. (2019). The Appropriate Roles for Equity and Efficiency in a Progressive Individual Income Tax. Fla. Tax Rev.23, 522.

Shabbir, M. S. (2018). Determining Money: A comparative analysis of Zakat (Alms) and Income Tax payers among selected ASEAN countries. Global Review of Islamic Economics and Business6(1), 051-061.

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