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 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:

displayNameTax category name, in a user-readable formatString
form1040SchedCLineNumberLine number on Form 1040 Schedule C (Sole Prop)String
form1040SchedCDisplayNameField name on Form 1040 Schedule C (Sole Prop)String
form1065LineNumberLine number on Form 1065 (LLC/LLP)String
form1065DisplayNameField name on Form 1065 (LLC/LLP)String
form1120SLineNumberLine number on Form 1120S (S Corp)String
form1120SDisplayNameField name on Form 1120S (S Corp)String
t2125LineNumberLine number on T2125 (Canada)String
t2125DisplayNameField 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.