" I can claim him as a dependent for tax purposes. "----> Sorry, no you can't;your brother must be a citizen or resident alien of the United States, Canada, or Mexico.as a F1 visa holder, your brother is EXEMPT from FICA Taxes for the first five years, but he is still subject to federal and state income taxes. Regardless of his income( even if his incoem is $0), he MUST file IRS Form 8843. Eve if he were in the U.S. even 1 day in 2010, heMUST file Form 8843.Also if he has simple bank interest and interest on CD's or etc. are not considered earned income for non-resident alien, and therefore are not reportable. His bank generally reports this interest on Form 1099 and he should retain this form for his records, but not mail it with yohistax filing.In gneral, if the total sum of his U.S. source income was less than the personal exemption ($3,650 for 2010) he is not required to file IRS Form 1040NR-EZ or Form 1040NR. However, if he had any taxes withheld, he should file IRS Form 1040NR-EZ or Form 1040NR to get a refund of these taxes and he MUST still file Form 8843.Due to a tax treaty provision, ONLY students from India may claim the standard deduction($5,700 for 2010) on the non-resident forms.
"He does not have a social security number or an ITIN."---> He can apply for an ITIN by filign Form W7. He needs to attach a valid federal income tax return, unless he qualifies for an exception, and include his original, notarized, or certified proof of identity and foreign status documents.If he wants to be on either OPT/CPT , then he can get SSN; I mean Social Security Number is ONLY available to F-1 student who has an offer of employment on campus or specific work authorization granted by the U.S Citizenship and Immigration Services.
"However, his 1098T form does have a value for the ssn field. Can this be used while filing taxes?"--->To claim the Qualified Student Loan Interest Deduction, he needs to be single; the interest paid by the student, on the Qualified Student Loan, can be deducted on Line 9 ( Interest Deduction on Qualified Student Loans ) of Form 1040NR-EZ.For his federal return, he can apply for his ( or his spouse's, if he married) ITIN file simultaneously by attaching the tax return to the W-7, expecting the IRS officials to fill-in the ITIN and file the return.However, for state returns, he needs to file an extension (make a payment if taxes are owed) and simply wait for the ITIN to be issued before filing. The state tax officials will not coordinate with the IRS and get the ITIN when it is issued.
Please visit the IRS website for further info on ITIN;
Individual Taxpayer Identification Number (ITIN)