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Form 14765 reconciliation, explained

The 14765 is the IRS's factual claim about which employee-months are assessable. Every month on it can be checked — here's how to read it and the five checks that shrink an overstated listing.

On this page
  1. Anatomy of the form
  2. The highlight rule
  3. The codes, decoded
  4. The five reconciliation checks
  5. Assembling the correction

Anatomy of the form

Form 14765, the Employee Premium Tax Credit (PTC) Listing, arrives with Letter 226-J. The header carries your employer name, EIN, and the tax year. Below that, one row per listed employee: last-4 SSN, name, an "additional information attached" flag, the Line 14 and Line 16 codes you reported on that employee's Form 1095-C, and twelve monthly indicator boxes plus an "all 12 months" indicator.

Source: Form 14765 (IRS PDF).

The highlight rule

The form's own printed instructions state the rule plainly:

In the IRS's words. "Any month not highlighted is a month that the employee received a PTC and no safe harbor or other relief from the ESRP was applicable. The employee is an assessable full-time employee for that month."

In other words: unhighlighted months are the IRS's bill. Highlighted months are months the IRS already excluded. Your job is to verify that every unhighlighted month deserves to be unhighlighted — and to find the ones that don't.

The instructions add a second rule worth knowing: "Any month that shows XF, XG, or XH is due to a determination that you do not qualify for the safe harbor being claimed (2F, 2G, or 2H). If you still think the safe harbor applies, you may provide your computation with your written request for reconsideration." Translation: when the IRS rejects your coded safe harbor, attach the computation.

The codes, decoded

The "Additional Codes" column combines the two lines from each employee's Form 1095-C:

  • Line 14 (offer of coverage), codes 1A–1U. 1A–1E describe offers of minimum-value coverage to various combinations of employee, spouse, and dependents. 1H means no offer of coverage — the code most directly tied to §4980H(a) exposure. 1F means the offer didn't provide minimum value. 1G marks non-full-time individuals. 1L–1U are ICHRA offers (individual coverage HRAs), with affordability varying by ZIP-code basis — a series many guides omit, and one our builder handles explicitly.
  • Line 16 (safe harbor / relief), codes 2A–2H. 2A (not employed that month), 2B (not full-time), 2C (enrolled in coverage), 2D (limited non-assessment period), 2E (multiemployer relief), and the three affordability safe harbors: 2F (W-2), 2G (federal poverty line), 2H (rate of pay).

Source: Instructions for Forms 1094-C and 1095-C.

The five reconciliation checks

For each unhighlighted month, run these in order:

  1. Was there actually a PTC? The 14765 is built partly from employees' individual returns. If the employee wasn't actually allowed a premium tax credit for that month, there's no ESRP trigger — full stop.
  2. Does a Line 16 relief code apply? 2A/2B/2C/2D/2E each remove the month regardless of anything else. 2B (not full-time) is often worth double-checking — verify against your measurement-method records.
  3. Do the Line 14 codes match reality? Compare what's printed against what you actually offered. A 1H (no offer) where coverage was offered, or stale codes carried forward from a prior year, creates phantom assessable months.
  4. Does an affordability safe harbor apply? Compute all three from your payroll figures — W-2, rate of pay, federal poverty line. If any one holds, the month isn't assessable under §4980H(b) even with a PTC. See the safe-harbor guide for the formulas.
  5. ICHRA months need ICHRA math. Codes 1L–1U use different affordability rules from the three safe harbors. Don't force them through the standard computation — use the ICHRA affordability worksheet.

Assembling the correction

Your response attaches three things to Form 14764:

  1. A corrected matrix — every 14765 month restated as assessable / not assessable / needs review, with the reason printed next to each.
  2. The computations — especially safe-harbor math for any month showing XF/XG/XH, since the form's instructions explicitly invite you to provide them.
  3. The evidence index — W-2s, pay-rate records, FPL tables, time records, and offer documentation, each tied to the months it supports.
Doing this by hand is exactly what the pack automates. The 226-J Reconciliation Pack ($129) runs all five checks across every employee-month, prints the corrected matrix, and assembles the packet. The deadline check is free.

This guide is general information, not legal or tax advice. Code definitions per the official 1094-C/1095-C instructions; verify against the sources linked above.