The maximum contribution is $6,500 or the child’s earned income, whichever is less. It doesn’t matter who funds the IRA within those limits. For example, if the child earned the $6,500 limit, the parent could use their own money to fund the IRA and let the child keep their earnings.
In terms of considering the child as an employee so that the child has earned income, that is problematic unless the child is able to do “real work “ and can actually be considered an employee.
