2. Should he claim exempt or zero on hisW4
3. He thinks he claimed exempt but federal took 230 and state 340
He should file to get a refund of the taxes that were withheld.
He needs to elect "Someone else can claim me" when he files so that you can still claim him as a dependent.
If he doesn't want taxes withheld he would claim to be exempt on his W4, if his employer would agree to it.