Short Answer
Zakat Ul-Fitr (Ṣadataqtul Fiṭr or Fiṭrah) helps the poor to enjoy the day of Eid without having to worry about working on that day. If you possess more than the value of 3 ounces of gold, excluding those possessions which are absolutely required for living such as clothing, a vehicle, basic furniture, or housing, then you must pay it. For example, Ali owns a car worth $5,000 and a motorcycle worth $4,000. Although he does not need to pay Zakah he must pay Zakāt Ul-Fiṭr since the motorcycle is not needed, despite being personal property. A man is required to pay a share of Zakāt Ul-Fiṭr on behalf of each minor child.
The amount to be paid was measured in foodstuffs during the time of the Prophet. It was four double handfuls of a staple food like dates, barley, or raisins. The monetary value nowadays is equivalent to about $10-30, depending on which food item is being given. However, it is recommended to pay the value in cash if it would be more helpful to the poor so they can purchase other things they need for the day of Eid.
The obligation to pay it begins at dawn on the day of Eid al-Fiṭr [which is the day after Ramaḍān], so whoever possesses the minimum amount of wealth at that time must pay. However, it is highly recommended to pay this earlier so that it reaches the poor people by the day of Eid. If you do not pay it on time, the obligation does not drop and you must still pay it even if late.
What the Qur’an and Sunnah Say
Abdullah ibn Umar says that “the Companions would give this charity a day or two before Eid al-Fitr.” (Bukhari #1440)
What the Scholars Said
“It is recommended (mustahab) to pay this charity before going out to the Eid prayer, because this was the habit of the Messenger of Allah and because of his statement, ‘Liberate the poor from begging on this day’. So if one pays it [to the poor] before going out to the Eid prayer, it will free him from begging on that particular day, and as such, he too will be in a position of offering his Eid Salat with contentment and a peace of mind.” (Bada’i as- Sana’i 2:74)
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Shaykh Mustafa Umar