The grant income should be reported on a 1098T that you should have received from the University he's attending. This should also report his tuition costs. The 1098-T will be reported on your tax return since you are claiming him as a dependent. You will also be able to enter the costs of any school materials that you were required to purchase (books, etc.) that you can deduct from the grant. Then you will be able to decide how to handle the extra grant income. The system will walk you through the options.
If, however, the grant was paid to your son and he received a W2 for it then it is taxable income in New York and he will have to enter it along with the work-study income and file a non-resident income tax return.
If that is not the case then $2500 is below the filing threshold so he is not required to file a tax return. He would only do it if there is withheld income tax in order to get that back or if you are trying to establish a tax history for him.
@uswede
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