$1500 is correct.
Line 9 of MI Form MI-1040 (emphasis added):
9. EXEMPTIONS. NOTE: If someone else CAN claim you as a dependent, check box 9e, enter 0 on line 9a and enter $1,500 on line 9e (see instr.)
Why are you not claiming him as a dependent?
With the federal tax law change, effective 2018, most students will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased.
The usual reason is that the parent is not eligible for the education credit.
While technically there is a provision that allows your student-dependent to claim a federal tuition credit, from a practical matter it seldom works out. A student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit (AOTC) if he/she supports himself by working. He cannot be supporting himself on student loans & grants and 529 plans and parental support. It is usually best if the parent claims that credit.
If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500 (AOTC shifts to all non refundable)
