In order for the bonus to be treated as earned income (compensation), it must be entered as self employment income. That is you must pay self employment (social security & medicare) tax on it. In addition, the amount of the income must be reduce by the deduction for 1/2 the self employment tax. Effectively only 92.35% of her 1099-NEC income is eligible for an IRA contribution. And that assumes she has no business expenses deductions reducing her net profit (92.35% of her NET self employment income is eligible for an IRA contribution).
