for federal purposes a taxpayer does not have to claim his dependents. however, the dependents must still indicate that they can be claimed as a dependent on their federal return.
the MD regulations do not make what you posted any clearer. To me it would seem if you do not claim him as a dependent on your MD return then box 1 on his MD return would be proper. However, you should wait for a response from someone more familiar with MD income taxes.
i will point out that quit often state and federal tax laws are not the same in which case you follow federal rules for the federal 1040 and state rules for state tax returns.
