Question

Recently I have gotten serious about my faith and wish to continue forward in life in a halal and proper way. However, before my change, I was involved in buying haram stocks and my wealth has interest in it. I was able to isolate the haram money and have not used it because I do not want my future ruined with this money. My plan is to donate the money so that I can clean my wealth. However, I am just confused on how much I have to donate.

I understand that I must donate 100% of the profits but my confusion lies in the way taxes work. So, the total profits were about $8,000. On that, the US tax will be about $2,500. My question is can I keep the amount I would own in taxes and donate the rest, or do I have to donate all $8000 and then pay the taxes out of my pocket. Which is the best way to go able cleaning my money.

Thank you for all the assistance and guidance

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As salāmu `alaykum wa rahmatullāhi wa barakātuh.

We ask Allah ta`āla to accept your noble intentions and efforts in purifying your wealth. Your question pertains to the disposal of accumulated, impermissible wealth by using a portion of it to pay the taxes accrued on it. As you have correctly pointed out, wealth gained through impermissible means should be disposed of immediately. Additionally, repentance should be sought with Allah ta`āla for having accumulated it. The fuqahā’ have stated that such wealth should be returned to the one from whom it was taken. If this is not possible or proves to be difficult, it should be given away to the poor without an expectation of any reward from Allah. A person is not permitted to benefit from it in any way. [1] This is because the interest wealth still belongs to its original owner. Hence, it should be returned to them. If unable, then it will be given away to the poor on behalf of its owner.

In the case described above, the profits should be returned to the entity from which it was taken. If the profits were received from the government (e.g., federal bonds), they may be returned to them in the form of taxes.[2] If this is not the case, the only other recourse to purify your wealth is to give it away to the poor.

And Allah ta`āla knows best

Maulana Mateen Khan
New Jersey, USA

Checked and Approved by:

Mufti Faisal bin Abdul Hamīd al-Mahmudi
Darul Iftaa Canada (fatwa.ca)

[1] رد المحتار على الدر المختار، ابن عابدين، دار الفكر (الشاملة)، 6:385
ويردونها على أربابها إن عرفوهم، وإلا تصدقوا بها لأن سبيل الكسب الخبيث التصدق إذا تعذر الرد على صاحبه

رد المحتار على الدر المختار، ابن عابدين، دار الفكر (الشاملة)، 5:99
والحاصل أنه إن علم أرباب الأموال وجب رده عليهم، وإلا فإن علم عين الحرام لا يحل له ويتصدق به بنية صاحبه

فتاوی محمودیہ، جامیہ فاروقیہ کراچی، 16:379

فتاوى دار العلوم ديوبند, مكتبة دار العلوم ديوبند, 14:494

[2] احسن الفتاوی، مفتی رشید احمد، ایچ ایم سعید کمپنی، 7:21

فتاوی مفتی محمود، محمد ریاض درانی، 8:341

فتاوى رحيمية, دار الاشاعت, 9:263