if i modify a source file in a piece of mit licensed code does that mean i need to open source it too or can i keep it closed source?
Basically if i distribute my program which uses a piece of modified mit licensed code and somebody asks for the mit code, do i just point him the original piece of code or do i have him my modifications too?
You don't have to distribute the source code if you're using MIT-licensed source code.
However, if you DO distribute the source code, you should include the original copyright notice of the MIT-licensed source code you adapted and/or used.
It depends on the details.
If you're just distributing the MIT-licensed code with minor mods then it is possible that they should also be MIT-licensed. Mind you, you're not really adding a lot of value in that case anyway, so it's probably better to just feed the changes upstream so that you don't have to maintain them all yourself. :-) After all, who would really be willing to pay you for something they can get virtually as good for free?
If you're adding a lot of extra stuff to make your own product, then you'll also be clear about the difference between the MIT-licensed part and your own code, and can simply say that the MIT parts are under their license and the rest is under your own (whatever you choose, including fully proprietary "no, you don't get the source"). All you need to do is say that some parts of the overall assembly are MIT-licensed and/or depend on MIT-licensed components.
To reify: I can write proprietary apps to visualize (e.g.) oil-well data that use Xlib to communicate with an Xserver, despite those both being MIT-licensed components. Nobody would confuse my application with Xlib or an Xserver; I'm adding value which is what people are paying for, not the extra copy of some MIT code.