Tax Categorization

Now that you've connected your Plaid Integration with Hurdlr's Expense Tracking API, you're ready to start leveraging all of the Expense Tracking features that Hurdlr has to offer, including Business & Tax Categorization.

1. How it works

Through Hurdlr's Plaid or MX integration, your user's transactions are pulled into Hurdlr as soon as Plaid makes them available. All of those transactions are then run through Hurdlr's proprietary algorithms, which leverage the user's business type, accountant best practices, and the behavior of similar businesses within the Hurdlr API's 1.3M+ users. The expense transactions are then categorized in three primary ways:

a) Business Categories: Hurdlr uses categories specific to the user's business, which a non-accountant business owner can understand. For example, an Uber driver's expense might be categorized as "Car Wash".

b) Tax Categories: All expenses are also mapped to a tax category, which an accountant can easily understand. Transactions are also mapped to specific line items on the 1040 Schedule C, 1065, 1120S, and 1120.

c) Personal Categories: Hurdlr also assigns a personal category (e.g. "Pets", "Childcare") to each expense, to handle scenarios where a business owner might accidentally charge a personal expense to a business account.

2. Displaying the user's expenses and allowing them to make edits

You can easily allow your users to view their expenses and make quick edits to categories, including the ability to split across multiple categories (e.g. for an Amazon order), by rendering Hurdlr Embedded's Expense Dashboard.

3. Identifying a transaction's tax categorization

If you are building your own user experience or want to perform programmatic processing on a user's expenses, you can retrieve those expenses from the Hurdlr API. On each expense transaction, you will see an expenseCategoryId field, which maps to one of Hurdlr's business-specific expense categories.

On each business expense category, you will see a nested taxCategory object. Within that object, you may find the following attributes to be of particular interest with respect to tax categorizations:

4. Utilizing tax categorization data

If the above information feels a bit abstract, don't worry! Since you're already using the Hurdlr API, all the necessary tax reporting is already provided with little-to-no extra labor. There's no need for you to learn all the tax nomenclature or to create your own tax reporting.

To learn more about the tax reports that you can generate from the Hurdlr API, take a look at our Tax Reporting documentation and/or consider embedding Hurdlr's Tax Dashboard.