1. He should file his own tax return, and you can still claim him as dependent if (1) he's under 24 years old; (2) you pay for more than 1/2 of his living expenses.
2. The maximum he can contribute to all IRAs are
the lesser of (1) taxable income (2) $6000.
3. Because his income is probably less than standard deduction, he won't pay income tax, therefore it is best he put the money into the ROTH IRA account.