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 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 app's 700k+ 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 ultimately maps to specific line items on the 1040 Schedule C, 1065, and 1120S.
c) Deduction Confidence: Based on the user's business type and many other factors, Hurdlr's algorithms predict whether any given expense is deductible.
2. Getting the user's pending expenses
First, you should retrieve a list of the user's expenses, which are expense transactions that your user has not yet approved.
3. Identifying a transaction's tax categorization
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:
|displayName||Tax category name, in a user-readable format||String|
|form1040SchedCLineNumber||Line number on Form 1040 Schedule C (Sole Prop)||String|
|form1040SchedCDisplayName||Field name on Form 1040 Schedule C (Sole Prop)||String|
|form1065LineNumber||Line number on Form 1065 (LLC/LLP)||String|
|form1065DisplayName||Field name on Form 1065 (LLC/LLP)||String|
|form1120SLineNumber||Line number on Form 1120S (S Corp)||String|
|form1120SDisplayName||Field name on Form 1120S (S Corp)||String|
|t2125LineNumber||Line number on T2125 (Canada)||String|
|t2125DisplayName||Field name on T2125 (Canada)||String|
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.
Updated 12 months ago