<p>Thanks for your reply. We don’t know how to do it. Everything we’ve read says we have to pay New York State taxes because his taxable income is more than $3K. Scholarship/Grant income is treated as “investment income” so we looked up “who must file” it says he must file as a non resident:
New York State nonresidents and part‑year residents
You must file Form IT‑203 if you meet any of the following conditions:
• You have income from a New York source and your New York AGI (Federal amount column) is
more than your New York State standard deduction. He is our dependent on our taxes and then it says "Does your child have investment income over $2,000? It would be to your advantage to file a New York return for your child to report your child’s investment income, since there will be no New York tax on the first $3,000 of that income. When you file your federal return, report your child’s investment income on federal Form 8615 (instead of federal Form 8814)</p>
<p>Part of my problem is that the income on his fed tax includes some California scholarship money, too so it seems I should deduct that because it’s not a NY “source” of income.</p>