Paying Family From Your US LLC: Is It on Form 5472?

Usually, yes. Your spouse, ancestors, lineal descendants, and brothers and sisters are your family under IRC § 267(b)(1) and (c)(4), which makes each of them a related party of your foreign-owned LLC. Money, property or services moving between the LLC and any of them is reportable, and each relative gets a separate Form 5472.

Family is often the first team a small foreign-owned LLC has. A sister designs the logo, a father lends start-up money, a spouse keeps the books. Owners who carefully report their own transfers into and out of the LLC often never think of these payments as Form 5472 items.

The rule on separate forms is explicit. The IRS Instructions for Form 5472 say to "file a separate Form 5472 for each foreign or U.S. person who is a related party with which the reporting corporation had a reportable transaction." The IRS international information reporting penalties page describes a $25,000 penalty "for each failure to file a complete and correct Form 5472 by the due date", so a forgotten relative's form is not a paperwork detail. You can test any payment with our free reportable transactions checker, and start your filing when you know how many forms the year needs.

Your spouse, parents, grandparents, children, grandchildren, brothers and sisters are related parties of your LLC. The route there runs through two definitions.

The Form 5472 instructions define a related party as any 25% foreign shareholder, any person related to the reporting corporation or to a 25% foreign shareholder within the meaning of section 267(b) or 707(b)(1), and any other person related to the reporting corporation under section 482. As the foreign owner of a single-member LLC, you are its 25% foreign shareholder. Anyone related to you under section 267(b) is therefore a related party of the LLC.

IRC § 267(b)(1) treats "members of a family" as related, and § 267(c)(4) defines the family: it "shall include only his brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants." The word "only" makes the list closed.

Relative	Family under § 267(c)(4)?	Related party of your LLC?
Spouse	Yes	Yes
Parents and grandparents	Yes, as ancestors	Yes
Children and grandchildren	Yes, as lineal descendants	Yes
Brothers and sisters, including half-siblings	Yes	Yes
Parents-in-law, brothers- and sisters-in-law	No	Not through the family rule; check ownership and control
Aunts, uncles, cousins, nieces and nephews	No	Not through the family rule; check ownership and control

"Not through the family rule" is not the same as "never related". The section 482 prong reaches control of any kind; Treas. Reg. § 1.482-1(i)(4) says controlled "includes any kind of control, direct or indirect, whether legally enforceable or not." A business that you control together with a cousin or an in-law can be related to your LLC for that reason.

Often, yes. Section 267 adds family ownership to your own when it tests whether you are related to a corporation.

Under § 267(c)(2), "an individual shall be considered as owning the stock owned, directly or indirectly, by or for his family." Under § 267(b)(2), an individual and a corporation are related when the individual owns, directly or indirectly, more than 50 percent in value of its stock. Put together: if your brother owns more than half of a company, you are treated as owning that stake, the company is related to you, and it is a related party of your LLC.

This matters most for trading families. An LLC that buys inventory from a parent's company, or sells to a sibling's distributor, has a related-party transaction with that company, and the company needs its own Form 5472. For entity types other than corporations, and for control without majority ownership, the section 707(b)(1) and section 482 prongs can also apply. Those cases deserve a closer look before you file.

Which family transactions go on Form 5472?

Any transfer of money, property or services between the LLC and a related relative is a candidate. The table shows where common ones go on that relative's Form 5472, using the line numbers on the current form.

Transaction with a foreign relative	Reportable?	Where it goes on the relative's form
The LLC pays your sister for design work	Yes	Part IV, line 29: consideration paid for services
Your father lends the LLC money	Yes	Part IV, line 17: amounts borrowed; interest paid on line 32
The LLC lends money to your son	Yes	Part IV, line 31: amounts loaned; interest received on line 18
The LLC buys inventory from your brother's majority-owned company	Yes	Part IV, line 23, on the company's form
The LLC pays rent to your mother for an office	Yes	Part IV, line 27a: rents paid
A relative works for the LLC for less than full pay	Yes	Part VI schedule describing the transaction
The LLC pays a cousin with no ownership or control link	Generally no	Not on Form 5472

Line 29 covers "technical, managerial, engineering, construction, scientific, or like services"; a payment that fits none of the listed lines goes on line 35, other amounts paid. Part VI covers nonmonetary and less-than-full-consideration transactions with a foreign related party. The instructions say the schedule must describe each such transaction so that its nature and approximate value can be determined, including a reasonable estimate of fair market value where possible. A transfer to a relative with nothing given in return also needs care: how it is characterised depends on the facts, so settle that before filing rather than picking a line at random.

Loans follow their own method. The instructions say to report amounts borrowed "using either the outstanding balance method or the monthly average method": beginning and ending balances on lines 17a and 17b, or a monthly average on line 17b.

What if your relative is a US citizen or US resident?

A relative who is a US person, such as a US citizen or US tax resident, still gets a separate Form 5472, but most of the transaction detail is left off. A relative who merely lives in the US while remaining a nonresident alien is still a foreign person, and Part IV applies as usual. The line 1g instruction covers "each foreign or U.S. person who is a related party", so the form is still required.

Three instructions then narrow what goes on it. The Part IV note says "Do not complete Part IV for transactions with a domestic related party." The definitions section says transactions with a U.S. related party "are not required to be specifically identified in Parts IV, V, and VI." And line 1f is not completed when the reportable transaction is with a U.S. related party. In practice, the form identifies the relative in Part III, where you tick "U.S. person" and give their US identifying number.

What if your spouse co-owns the LLC rather than working for it?

Then the LLC has two members, and it is no longer a single-member LLC. Paying a spouse who is an employee or contractor is a related-party transaction on a single-member LLC's Form 5472. Holding the LLC jointly with a spouse is a different structure with a different filing question, covered in our multi-member LLC guide.

How do you prepare a Form 5472 for a family member?

Work from the list of people and companies the LLC dealt with, not from memory. The steps below produce one form per related party:

List every counterparty for the year. Include everyone the LLC paid, was paid by, lent to or borrowed from.
Test each one. Check the § 267(c)(4) family list and the more-than-50% ownership rule, or run each item through the reportable transactions checker.
Group the transactions by related party. Each related relative, and each related company, gets its own Form 5472.
Convert every amount to US dollars. Part IV amounts must be stated in US dollars with "a schedule showing the exchange rates used".
Complete Part III. Enter the relative's name and address, their US identifying number if they have one or a reference ID for a foreign relative without one, and tick the line 8e boxes that apply. "Related to 25% foreign shareholder" always fits a family member; because § 267(c)(2) treats a relative as owning your stake, "Related to reporting corporation" can apply too.
Complete Part IV or Part VI. Use the lines in the table above for a foreign relative; use Part VI for less-than-full-consideration transactions.
Complete lines 1g and 1h. Line 1g is the total number of Forms 5472 filed for the year, including your own; line 1h is the total value of foreign related-party transactions across all of them.
File every form together. Attach all the Forms 5472 to the one pro forma Form 1120 and fax or mail the package as the instructions direct.

Four scenarios, worked through

One LLC, one year, four relatives. The figures are illustrative.

1. A sister abroad, paid in euros. The LLC pays the owner's sister in Spain €6,000 for design work in 2025. Using the IRS 2025 yearly average rate of 0.886 euros per dollar, that is €6,000 ÷ 0.886 = $6,772.01. It goes on her own Form 5472, Part IV, line 29.

2. A father's loan. The owner's father lends the LLC $10,000 on 1 March 2025 at agreed interest, and the LLC pays him $250 of interest in December. The full $10,000 is still owed at year-end. Using the outstanding balance method, his Form 5472 shows $0 on line 17a, $10,000 on line 17b and $250 on line 32.

3. A spouse who is a US citizen. The LLC pays the owner's spouse $5,000 for bookkeeping. She is a related party and gets a separate Form 5472, with "U.S. person" ticked in Part III. Part IV is not completed, and line 1f is left blank on her form.

4. A cousin who freelances. The LLC pays the owner's cousin $3,000 for video editing. Cousins are not on the § 267(c)(4) list, and he has no ownership or control link to the owner or the LLC, so he is not a related party. No Form 5472 is filed for him.

Add the owner's own Form 5472 for contributions and distributions, and the year needs four forms: owner, sister, father and spouse. Line 1g on each shows 4.

How does Form5472 Prep handle LLCs with family transactions?

Our questionnaire asks about every related party, not only the owner, and we prepare a separate Form 5472 for each one alongside the pro forma Form 1120 and the Part V statement. We fax the complete package to the IRS Ogden PIN Unit with a timestamped transmission receipt. Every filing is reviewed by a qualified accountant before it is submitted.

Standard: $149, ready in 5–7 business days
Express: $199, within 3 business days
Each additional past tax year: +$99
IRS fax delivery: included

We are not a CPA firm and do not give tax advice. If a family structure involves shared ownership, trusts or several companies, have it reviewed by a qualified adviser. See pricing or start your filing.

Frequently asked questions

Yes. IRC § 267(c)(4) lists a spouse as family, and the Form 5472 instructions make anyone related to a 25% foreign shareholder under § 267(b) a related party. Transactions between your LLC and your spouse are reportable on a separate Form 5472.

Yes. Section 267(c)(4) includes ancestors and lineal descendants, so parents, grandparents, children and grandchildren are all related parties. Each one who dealt with the LLC during the year needs a separate Form 5472.

Not through the family rule. The § 267(c)(4) list covers only siblings, spouse, ancestors and lineal descendants. A business you control together with an in-law or cousin can still be related under section 482, so check the business ties.

Does each family member need a separate Form 5472?

Yes. The instructions say to file a separate Form 5472 for each foreign or U.S. person who is a related party with a reportable transaction. Line 1g on each form shows the total number of forms filed for the year.

What if my relative is a US citizen or US resident?

They still get a separate Form 5472, marked as a U.S. person in Part III. The instructions say not to complete Part IV for a domestic related party, and such transactions need not be specifically identified in Parts IV, V and VI.

It is if he owns more than 50% of it in value. Section 267(c)(2) treats you as owning your family's stock, and § 267(b)(2) relates an individual to a corporation more than half owned by that individual. The company then needs its own form.

Where does a loan from my parent go on Form 5472?

On your parent's own Form 5472, Part IV, line 17, amounts borrowed, using beginning and ending balances or a monthly average. Interest the LLC pays goes on line 32. Convert foreign-currency amounts and attach the exchange-rate schedule.

Family payments are ordinary business, but on Form 5472 each related relative is a separate return with a separate penalty exposure. List the year's counterparties, test each one, and start your filing with the full list so every form is prepared together. For the wider set of owner transactions, see our Form 5472 reportable transactions examples.

Educational content only; not tax or legal advice.

Which family members are related parties for Form 5472?

Are companies owned by your relatives related parties too?