It depends. If your son made more than $400, and he intended to make a profit, then he has started a business. He can still file a tax return while being claimed on your tax return as a dependent if you are providing more than 50% of his support.
When filling out his My Info section, check Yes under 3. A few other things we need to know, the first question: Someone else can claim me as a dependent on their tax return.
If this is more of a hobby, then he must report the income and will not be allowed to claim any expenses.
For more information, see:
Selling Homemade Goods on Etsy? Use this Tax Preparation Checklist - TurboTax Tax Tips & Videos
Do I have to report hobby income?
