Expense Categorization

Assign every transaction to the correct expense category so it flows to the right line on a tax return, produces accurate financial statements, and survives an audit.

Read these when needed

• Read references/DECISION-RULES.md when deciding whether a category is safe to auto-assign or should go to review.
• Run scripts/category_review_summary.py when you already have categorized records and need a deterministic summary by confidence, category, and review status.

Why categorization matters

The IRS doesn't audit "total expenses." It audits individual line items on Schedule C (or the equivalent form for your entity type). A business that lumps everything into "Other Expenses" invites scrutiny. Proper categorization also reveals spending patterns — you can't cut costs you can't see.

For the full Schedule C line-by-line reference (Lines 8–27a with what belongs and what doesn't), see the schedule-c-categories skill.

Categorization logic

Primary signal: vendor name