It is preferable to pay your child with a W-2. When paid on a W-2, neither you nor your child will be required to pay Social Security or Medicare taxes. Also, you will not have to pay unemployment taxes.
Since she would pay no tax at her level of income the deduction for a traditional IRA would not help her so a Roth would be a better choice. You might have trouble finding a financial institution that offers an IRA with less than a $1,000 contribution since you can only contribute a maximum of her earned income or $6,500 whichever is less.
