To qualify as earned income, it would have to show up on some sort of official form, and be reported via a tax return.
The 1099NEC (non-employee compensation) would be sufficient. You have to use the Schedule C (with a 1040) to report it as income. So long as the sum is less than $4,000, she won’t owe any income tax and she’ll still be your dependent. The flaw with self-employment is that one pays Self Employment Tax on the net income. That’s really going to Social Security and Medicare. And, SE pays both halves of SS, less the credit for 1/2 the paid amount. (7.65 x 2) .9235 = 14.12955. Granted, that goes to her SS account.
That said, I have no idea how closely the IRS monitors the earned income for any IRA’s. I would assume that you would run the risk of having them force you to recharacterize the account whenever they got around to looking.
I pulled this paragraph from Google:
Dependents – If you can be claimed as a dependent by another taxpayer, your standard deduction for 2023 is limited to the greater of: (1) $1,250, or (2) your earned income plus $400 (but the total can’t be more than the basic standard deduction for your filing status).
So, if the account was just an investment account, she could make up to $1250 in dividends and such without having to pay income tax, and since that money wouldn’t be considered “earned” (because she didn’t work for it), then she wouldn’t pay SE tax on it.
Might consider asking an investment person about the possible consequences of opening an IRA account without a tax return for the person. Although, this is what Google says:
The IRS gets a little grumpy if you contribute to a Roth IRA without what it calls earned income. That usually means that you need a paying job—working for either someone else or your own business—to make Roth IRA contributions.
edit: I’m assuming that they mean by “grumpy” that they force you to recharacterize the earnings as taxable income for all the years that the account has been open.