Transaction Categorizer

Transaction Categorizer

Table of Contents

• Overview
• Input contract
• Workflow
• Taxonomy
• Rule format
• Confidence and audit
• Output contract
• Guardrails

Overview

A transaction is just a description_raw string and a signed amount_cents. This skill turns that into a clean merchant, a category + subcategory, an is_recurring boolean candidate, and a confidence. It applies rules first (cheap, deterministic) and only falls back to LLM inference for the residual.

It also produces learned rules — when a confident classification matches a clear merchant pattern, propose a new rule for the rule table so future identical transactions match for free.

Input contract

The caller provides:

• transactions — array of {id, description_raw, amount_cents, account_id, date, account_type}.
• taxonomy — the categories.json taxonomy block (top-level → subcategory list).
• rules — array of existing rules (see Rule format).
• account_type_hints (optional) — when known, helps disambiguate (e.g., a deposit on a brokerage account is more likely dividends than salary).

Workflow

Categorization Progress:
- [ ] Step 1: Normalize description_raw
- [ ] Step 2: Apply rules in priority order
- [ ] Step 3: Classify residual via LLM with taxonomy guard
- [ ] Step 4: Detect recurring candidates
- [ ] Step 5: Score confidence
- [ ] Step 6: Propose new rules from high-confidence matches

Step 1 — Normalize

Build a description_normalized for matching only — never overwrite description_raw.

• Uppercase.
• Strip leading vendor codes (SQ *, TST*, PAYPAL *, CKCD, POS DEBIT, ACH DEBIT).
• Strip trailing geo ( PORTLAND OR, 800-555-1234 CA, #1234).
• Collapse multiple spaces.
• Drop date numerics inside the description.

SQ *TRADER JOES #123 PORTLAND OR → TRADER JOES.

Step 2 — Apply rules

For each transaction, walk rules in priority order. First rule whose match substring (case-insensitive) is a substring of description_normalized wins. Apply its merchant, category, subcategory, and is_recurring (if set).

If multiple rules match, the most specific (longest match) wins.

If a rule matches, set source: "rule" and confidence: 1.0.

Step 3 — Classify residual

For unmatched transactions, classify via LLM:

• Constrain output to the supplied taxonomy — never invent a category.
• Pick category.subcategory (e.g., food.groceries).
• Propose a clean merchant name.
• If sign and account_type imply income, prefer the income.* branch.
• If account_type is brokerage or 401k and amount is positive, prefer income.dividends, income.interest_earned, or savings_investment.*.
• If description_raw looks like an internal transfer between two of the user's accounts, classify as financial.transfers_internal.

Set source: "llm" and confidence: 0.6–0.9 based on signal strength.

Step 4 — Detect recurring candidates

Set is_recurring: true candidate if:

• The merchant has been seen ≥ 3 times in the last 90 days on the same account, with amount within ±10%, at a regular cadence (weekly, biweekly, monthly, quarterly).
• OR a matched rule explicitly set is_recurring: true.

This is a candidate — promotion to recurring.json is the recurring-charge-detector skill's job.

Step 5 — Confidence

If confidence < 0.5, mark category: "uncategorized.unknown" and flag for review.

Step 6 — Propose new rules

After classification, scan high-confidence LLM matches (confidence ≥ 0.85) where the same description_normalized substring covers ≥ 3 transactions in the input set. For each, propose a new rule and append to rules.proposed[] in the output. The bookkeeper agent confirms these before they merge into categories.json.

Taxonomy

The skill respects the taxonomy supplied by the caller. The default taxonomy used by the household-finance team is:

housing → mortgage, rent, property_tax, hoa, home_insurance, home_maintenance,
          utilities_electric, utilities_gas, utilities_water, utilities_internet
food → groceries, restaurants, coffee, alcohol
transportation → gas, auto_insurance, auto_maintenance, public_transit, rideshare,
                 parking, tolls
health → medical_copay, prescriptions, dental, vision, mental_health, gym
personal → clothing, haircare, subscriptions_personal
kids → childcare, school, activities, kids_clothing
entertainment → streaming, events, hobbies, books
travel → flights, lodging, travel_food, travel_other
financial → fees, interest_paid, transfers_internal
income → salary, bonus, interest_earned, dividends, capital_gains, refund, other_income
savings_investment → 401k_contribution, ira_contribution, hsa_contribution,
                     brokerage_deposit, savings_deposit
uncategorized → unknown

Never invent a category. If a transaction does not fit, use uncategorized.unknown and emit a taxonomy_gap warning.

Rule format

{
  "match": "TRADER JOE",
  "merchant": "Trader Joe's",
  "category": "food",
  "subcategory": "groceries",
  "is_recurring": false,
  "priority": 100,
  "added_on": "2026-01-20",
  "source": "user_confirmed | learned"
}

Higher priority values win ties. Rules added by humans default to priority 200; rules learned by this skill default to 100.

Confidence and audit

Every output transaction carries:

• category and subcategory — must be in taxonomy.
• merchant — clean display name.
• confidence — [0.0, 1.0].
• source — rule | llm | uncategorized.
• matched_rule_id (if source: rule).

Never overwrite description_raw; always preserve it for re-classification.

Output contract

{
  "categorized": [
    {
      "id": "tx_20260115_001",
      "merchant": "Trader Joe's",
      "category": "food",
      "subcategory": "groceries",
      "is_recurring_candidate": false,
      "confidence": 1.0,
      "source": "rule",
      "matched_rule_id": "rule_trader_joes"
    }
  ],
  "rules_proposed": [
    {
      "match": "BLUE BOTTLE",
      "merchant": "Blue Bottle Coffee",
      "category": "food",
      "subcategory": "coffee",
      "evidence_count": 4,
      "evidence_tx_ids": ["tx_20260103_004", "tx_20260110_002", "tx_20260117_007", "tx_20260124_001"]
    }
  ],
  "warnings": [
    { "tx_id": "tx_20260118_009", "type": "taxonomy_gap", "description_raw": "ZELLE TO M COPPENS" }
  ],
  "summary": {
    "total": 142,
    "rule_matched": 118,
    "llm_classified": 22,
    "uncategorized": 2,
    "uncategorized_pct": 1.4
  }
}

Guardrails

• Preserve description_raw byte-for-byte. Normalization is for matching only.
• Never invent categories. Stay within the supplied taxonomy.
• Account-type aware. A "deposit" on a brokerage account is not salary; a "withdrawal" on a savings account is likely a transfer, not spending.
• Internal transfers must net to zero across accounts. If a financial.transfers_internal is classified on one side, the matching opposite-sign transaction on the other account should also be transfers_internal — flag if not.
• Uncategorized rate above 5% of new transactions in a batch is a quality signal; surface it in the summary.
• No PII in proposed rules. A rule like match: "ZELLE TO JOHN SMITH" exposes a name; redact or skip such proposals.