The Chavis Chronicles

>> I'm Dr.

Benjamin F. Chavis Jr., and this is "The Chavis Chronicles."

>> When it comes to strategy, math has nothing to do with it.

It's all about what type of strategy can I employ to be able to get this deduction to reduce my tax liability all together?

>> Major funding for "The Chavis Chronicles" is provided by the following.

At Wells Fargo, we continue to look for ways to empower our customers.

We seek broad impact in our communities, and we're proud of the role we play for our customers and the US economy.

As a company, we are focused on supporting our customers and communities through housing access, small-business growth, financial health, and other community needs.

Together, we want to make a tangible difference in people's lives.

Wells Fargo -- the bank of doing.

American Petroleum Institute -- our members are committed to accelerating safety, environmental, and sustainability progress throughout the natural gas and oil industry.

Learn more -- api.org/apienergyexcellence.

Reynolds American -- dedicated to building a better tomorrow for our employees and communities.

Reynolds stands against discrimination in all forms and is committed to building a more diverse and inclusive workplace.

>> We're very honored to welcome to "The Chavis Chronicles" attorney Markwei Boye.

Attorney Boye, welcome.

Good to see you.

>> Thank you.

Good to see you as well.

>> Tell us about your upbringing.

and how did you get to Southfield, Michigan?

>> Well, I came here as a young man from Ghana.

I had the ability to come here to go to college.

>> You had scholarship?

>> Actually, I did not.

I have to work my way through with the help of my uncle, who was here at that time, who encouraged me to come to the United States.

So I followed his lead, came here, went to school.

The rest is history.

>> You worked your way through college?

>> I actually did, and I wouldn't say it was an easy one because I had a lot of challenges.

Because I'm new to the society, the culture is totally different, and sometimes I even laugh at my own self because I actually thought the weather is 90 degrees year round like I had when I was in Ghana.

I had a shock of my life.

I believe it was January 16th when I arrived here in the US, and the first thing I experienced was the cold.

And I was like, "Oh, my God, can I live in this society?"

I guess I could, and here I am.

I actually like the weather now.

>> Alright.

Great.

You've become acclimated.

>> I have.

>> Tell us how you decided to focus as a tax attorney.

>> Well, I got into tax law by accident.

Once I was in college, I took a lot of accounting and finance classes.

>> Where'd you go to college?

>> I went to college at University of Detroit Mercy, and then I went -- I did my master's degree at Wayne State University.

Then I decided to go to law school.

So, what happened was, in all the classes I took, the only thing that piqued my interest was tax law because, again, my mind is always about money.

And when I realized there are strategies that you can employ to make you pay less taxes and keep more of your money, I'm like, "Okay, this is the space I want to be in," and I started pursuing that.

>> So, today, it's my understanding that you spend a significant amount of your time giving people tax counseling, tax assistance, particularly after they've gotten themselves in trouble with tax laws.

How can people prevent themselves from getting a tax situation?

And then I want to talk to you about what some of your advice may be to those who are already in trouble.

>> Taxes is about strategy.

And the way the tax code is written, it has s a lot of technical jargons in it that the ordinary person can never understand.

There are some tax attorneys, CPAs, and enrolled agents that cannot even understand it because it is that complex.

And it's a lot.

>> Is it complex and complicated deliberately?

Or is it just a matter of over the years?

>> I think -- Actually, I'd say both.

It's -- I think it's deliberate because most people don't like to read.

And for most people as well, they don't seek the help of a tax professional.

So they cruise through what they know.

What they know is not good enough because within that code is countless amount of strategies that you can employ to make a person pay less taxes, especially when it comes to small businesses.

But they usually don't seek professional help, and they always try to do everything based on their own understanding.

And what I think happens is it robs them of their future financial stability.

And so what I tell most people is, "Be good at what you do and hire a professional to do the rest for you."

Because, again, the code is written in such a complex way that the ordinary person cannot understand it.

And so that's really the problem.

>> The code that you're referring to, this is the federal tax code?

>> Yeah, the Internal Revenue Manual.

It's very, very complex, and it's vast.

And so, if you seek a professional, they will be able to give you the nuances about what strategies you can employ to make your life a whole lot easier in terms of paying lower taxes.

And that's really what I do in my practice -- giving clients high-end strategies to make them pay less taxes.

>> As a professional, how much percentage of your time today is counseling people who have gotten themselves in trouble with the tax laws?

>> I would say 50-50.

And I say that because the ideal situation for everybody is to learn the strategies, learn how to follow the rules and the laws so that you don't get yourself in trouble in the first place.

>> Okay, but in order to do what you just said, you need professional help.

>> I think you do.

>> Yeah, because I don't think anybody is born with tax inclination.

>> Absolutely not.

And, again, the law is so complicated, it is even difficult for professionals to even grasp all of it.

And so every day we are learning.

We're researching because you might come across a case that you have never seen before.

The good thing is we have the tools and the resources to go and find what solution is best for that taxpayer.

>> So, what you bring to a client is not only what a CPA brings, but you're a lawyer.

>> Yes.

>> So it's the law that governs the tax code.

>> A lot of people think tax is about numbers.

Actually, it isn't.

Taxes is pure law.

It's absolutely pure law.

When it comes to math, the software will do that for you.

So, the key is, is the software doing what it's supposed to do?

>> Right.

>> That's where the problem comes in.

Would the software be intuitive enough to decide what strategy is good for you?

Those things are not there.

>> You just said something very profound.

I know for the majority of people who watch "The Chavis Chronicles," they're probably sitting up in their seat for you to say that the tax law -- that the tax code is primarily law, not primarily arithmetic.

>> 100%.

Because guess what.

When it comes to strategy, math has nothing to do with it.

It's all about, "What type of strategy can I employ to be able to get this deduction, to reduce my tax liability all together?"

What I just said has nothing to do with math.

>> Okay.

>> Absolutely not.

It's all about pure law and how you apply the law to the program to get you the results that you want.

>> Explain to our audience the difference between a tax deduction and a tax credit.

>> Excellent question.

Tax deduction is what -- What essentially a tax deduction is, is an item that the law says you can deduct against your income.

So, you take your deduction, you subtract it from your income, and then you come to your taxable income.

Now, a credit is totally different because a credit does not actually reduce your tax liability, but it can come to you dollar to dollar in terms of a refund.

So when you take a standard deduction or an itemized deduction because you own a home, that deduction is taken out of your income before you get taxed.

However, if you have a credit, the credit can actually eat up all your taxable income, and that will result in you getting a refund or owing a whole lot less.

So, between a deduction and a credit, which one do you want?

Credit all day.

>> Well, you know I know a lot of businesses seek tax credits.

>> Of course.

For that precise reason.

>> Yes, I understand.

What would you advise beginning entrepreneurs to start a business in the proper way, but make sure that that business is aligned with tax law?

>> When it comes to business, what robs people from being able to run a successful businesses is most people do not want to take that risk.

Business is very risky.

So the question is, "Do you want to risk, or you want to play it safe?"

So, what I tell most people that come to my office and wanted to start a business, I always -- The first thing I tell them is to be bold and to be focused because the easiest thing that can distract you from not being able to run a successful business is not staying focused.

And I'll give you my own practical example.

I used to work for -- I used to work in corporate America.

After five years of working in corporate America, I realized that wasn't me.

So I decided to start a small business.

I stayed focused.

All my friends were telling me, "Oh, business is too hard.

What happens if you don't get clients?

How are you gonna feed your family?"

Those are all things that you hear people say.

And that makes a lot of people become very fearful to start a business.

But if you are bold and you are a risk taker and you seek the help of professionals who can guide you through the steps -- 'Cause unfortunately, most small business owners always want to do a trial and error.

That is not the time -- This is not the time for trial and error.

You need to seek counseling, where we walk you through step by step the process.

What type of entity do you want to choose?

What type of entity will give you the maximum credibility in terms of tax deductions, in terms of tax credits, in terms of IRS audit?

So, all these things come into place.

So, when people come into my office, I literally sit them down and go through all this process with them.

>> What structure, from a tax perspective, would you recommend to young people who want to become an entrepreneur?

>> You know, that is a very subjective point because most people start as a sole proprietor.

That means it's just a disregarded entity.

>> Sole proprietor is an individual businessperson.

>> The individual person.

I'm doing a business as my name.

Some people start with an LLC, which is has gained a lot of traction, but it's not necessarily the best.

For some people, you might have a partnership, which means you literally have to confide in each other.

You have to be of the same mind.

You have to make decisions together.

And that can create a lot of problems sometimes.

If you want to form a partnership, I always tell my clients, "You are going into marriage, so you better be prepared."

>> It's that serious?

>> It's that serious because you have to have the meeting of the mind.

And if you don't have the meeting of the mind, you can see the problem just rapidly coming at you.

You can also have an S Corp, which is an "election" that you have to -- >> An S Corporation.

>> S Corporation, which is an election that you do with the federal government.

Or you can have a C Corp.

But all these entities are legal structures, but choosing one over the other will depend on what exactly your need is.

So, let me give you an example.

If you don't want any liability to fall under you personally, it's always better to form a C Corp because when you form a C Corp, a C Corp stands on its own.

And so every tax liability that comes in the business is owed by the C Corp and the C Corp has to pay no taxes.

So, it depends.

>> You're giving out a lot of important information.

>> Oh, yeah.

>> What you've outlined already is complex.

>> Very.

>> But because you are a professional -- I tell people all the time, complex problems require complex solutions.

>> Correct.

>> You said at the beginning people were somewhat trying to discourage you from going into business for yourself and taking the risk.

Do you run into those people now that you're very successful to let them know that you were right and they were wrong?

>> Oh, I get a lot of it.

And here is the strange and the craziest part.

family, the people that care for you the most.

And I think it's because they don't -- they don't like to take a risk.

So they will always want to play the safe role.

And like I said, I have been through that.

I used to work for corporate America.

When I decided to go into private practice, almost all my friends were like, "Wait a minute.

You're in corporate America.

You got a good job.

You're getting paid well.

You are guaranteed a paycheck every two weeks.

What is your problem?

Why don't you keep that job and just enjoy the money you are making instead of leaving a guaranteed paycheck to go and start a business that is not certain?"

But, again, that is where the risk comes in.

That's why I always emphasize you have to stay focused and you have to stay on your mission.

Zuckerberg, Bill Gates -- they all had a vision, and they stayed focused.

That's why they are where they are today.

Because if you let friends sway you or family sway you, you will never reach your potential.

And that's a true fact.

>> We live in a digital age.

And unfortunately, a lot that's out there on the Internet is not accurate.

What's your caution to people about these various Internet services that sometimes are even for free, where they tell you it's for free, and wants to get you hooked?

>> You see TikTok, you see Instagram, people that are super unqualified giving advice to viewers, and viewers take it as a fact.

Now, that is a recipe for disaster.

And trust me, I have seen so many of that in my office.

And why do I say this?

Because you see some "influencers" -- is what they call themselves -- and they're giving this bad advice.

Clients took it to be a "fact" because it's convenient.

It sounds good, but in reality, the law is totally different.

And so you only see them in my office when it has backfired and IRS is chasing them everywhere.

Then they seek professional help.

At that point, it might be too late.

>> To avoid problems, what kind of financial records should people endeavor to keep?

>> The card is always the best means of keeping good records because once you swipe the card, it triggers a record on your statement.

Now, the fact that it triggers a record on your statement does not necessarily mean that expense is deductible.

And that's the illusion that some people have.

So, if you swipe that card, you have to know for sure that it will be a deductible expense.

So, everything on your statement will be there because all you need to do is get a statement from the bank or the credit card company.

That is the best effective way of keeping records.

And the reason why receipts is good, but not effective is because they fade.

Over time, they will fade.

Now, some people have gone to the extent of getting, like, small printers that you can scan in.

If you can scan that -- >> Digitize their receipts.

>> Yeah, digitize the receipt.

So, if you can do that, that is great, but if you swipe the card, it will be on your statement.

The burden is then on you, the taxpayer, to prove that those expenses are usually deductible.

And so you have to look at, "Is the expense ordinary?"

Ordinary means that it has to be common in your line of business.

And if it is, then it is deductible.

The expense has to be necessary.

That means you need it in order for you to be able to function in the business that you are in.

So, for instance, you have a desk, a chair, a computer.

You need those things to be able to function in your business.

And if it is necessary, then it is deductible.

Then the third is the expense doesn't have to be ordinary or necessary, but if it is helpful to the running of your business, that expense is also deductible.

If you meet any of these three criterion -- ordinary, necessary, and helpful -- what is in your statement is deductible by law.

And that's clearly stated in the IRS manual.

>> So that means then each individual has to pay attention to their bank statements, go through them and note those that are deductible.

>> Correct, and that's where the bookkeeping comes in.

So, if you have your -- if you have a bookkeeper, the bookkeeper gets your bank statements every month.

So they run through every line, line by line, and they will ask you, "What is this expense for?"

That's how they are able to determine whether the expense is deductible or not.

And they categorize all of them in your bookkeeping system to be able to generate your profit and loss statement.

>> So, a lot of people are running their businesses from home.

>> Mm-hmm.

>> How do you keep personal home expenses different from business home expenses?

>> This is where the law of commingling comes in -- because you cannot commingle your personal expenses with your business expenses.

>> Say that again, please.

>> Commingling.

You cannot commingle your personal expenses with your business expenses.

So, if you have a bank account, you want to keep your personal bills separate in your personal account and then your business expenses in your business account.

And the business account has to have a tax ID or EIN attached to that account.

And then your personal should be attached to your Social Security Number.

That way, every personal expense will be written off in your personal account, and any business deductions will be written off in your business account.

You cannot commingle the two.

>> What if somebody uses their business account for something personal?

>> Generally, you are not supposed to, but if you do, we know that, because it's a personal expense, it will not be deductible.

>> Okay.

>> But I try to explain to clients to refrain from doing that because when you get to an audit, those are the things the agents start looking for.

And the more personal they see, even though there might be some business expenses that is deductible, the agent will start to question it.

And if you can avoid it, just avoid it all together.

>> As a professional tax lawyer, what gives you your greatest hope?

>> Well, what gives me the greatest hope is technology is changing.

There's a lot of advancement.

Our people are getting more aware of society.

And these young guys and young women are getting educated.

And at some point, they're gonna take over, and I hope they are better than the generation that came before them and before us.

So, I'm very hopeful.

>> More opportunity.

>> More opportunity.

I think the opportunity is there.

It's just a matter of tapping into it, which means parents need to encourage their children to do better.

And if they do better, they know better.

>> Attorney Markwei Boye, thank you for joining "The Chavis Chronicles."

>> It's a pleasure to be with you.

Thank you so much for having me.

>> For more information about "The Chavis Chronicles" and our guests, visit our website at TheChavisChronicles.com.

Also, follow us on Facebook, X, LinkedIn, YouTube, Instagram, and TikTok.

Major funding for "The Chavis Chronicles" is provided by the following.

At Wells Fargo, we continue to look for ways to empower our customers.

We seek broad impact in our communities, and we're proud of the role we play for our customers and the U.S.

economy.

As a company, we are focused on supporting our customers and communities through housing access, small-business growth, financial health, and other community needs.

Together, we want to make a tangible difference in people's lives.

Wells Fargo -- the bank of doing.

American Petroleum Institute -- our members are committed to accelerating safety, environmental, and sustainability progress throughout the natural gas and oil industry.

Learn more -- api.org/apienergyexcellence.

Reynolds American -- dedicated to building a better tomorrow for our employees and communities.

Reynolds stands against discrimination in all forms and is committed to building a more diverse and inclusive workplace.