Your dependent is not required to file either a federal or IL return (assuming the $1767 is his only income). But is allowed to file if he wants his $87 back. He does not need to file a federal return and the red flaggyness is minimal. That said, you cannot prepare a state return in TurboTax without preparing a federal return first. And you cannot efile a state return unless you efile a fed too.
Q. Does that change anything for (say) reporting the 1099Q in her name (I know I'll still claim the 1099Qs in my name, if they get reported at all), and where the 1098-T gets reported?
A. No.
