What other income does the child have besides the 1099-DIV? If he has "unearned" income of more than $2,300 he is probably subject to "kiddie tax," which is not covered in Free Edition. Unearned income is basically anything other than income from a job or self-employment. It could be other investment income, including interest, unemployment, taxable scholarship income, etc.
If the student is claiming the American Opportunity Credit, Lifetime Learning Credit, or student loan interest deduction, none of those are included in Free Edition either.
None of this solves your problem, but it might identify why TurboTax is telling you that you have to upgrade.
