How do I respond the question about a dependents living situation if they attended boarding school out of state?

When a child lives away from home while attending school it is considered to be a temporary absence so you can still say they lived with you.

A dependent living out-of-state to attend school is treated as if they lived at home during that time. 

That is only a "Temporary Absence" from the home.

Consider that time as time in your home.