Please keep your questions to one thread:

https://accountants-community.intuit.com/questions/1826855-is-it-correct-that-a-penalty-is-being-cal...

They must have "taxable compensation" in order to contribute to an IRA.  So excluded income does not count.  So if they have no "taxable compensation" (such as non-excluded wages or self employment income), they are not allowed to contribute to an IRA.

If they some wages or self employment income that is not excluded, they can contribute to an IRA up to the amount of taxable compensation (or the $5500/$6500 limits).