Tax Year Prior to 2020: 1099 Q and dependent status

Yes, being at school is the same as living at home for tax purposes. (be sure to select "All year" for the months he lived at home when you enter him on your return in the "My Info" section) 

So if he is your son, he was a student under 24 in 2019 and he doesn't supply more than half his own support, he is your dependent and you claim him. 

If you are entering the 1099-Q, be sure to also enter the 1098-T that the school issued to the student. You might get an education credit. 

Even if he is your dependent, he might need to file a tax return, depending on his income.

If he does file, he needs to select "Someone else can claim me" and "Someone else will claim me" on his return. 

one point of clarification.... whose social security number is on the 1099Q... THATs whose tax form the 1099Q goes on.  

whether your son needs to file a tax return is independent of whether he is your dependent.  Filing the tax return is dependent on his income and not whether he is your dependent. 

"$5000 in income as mentioned on the 1099 Q".

There is no actual income shown on the 1099-Q. The "earnings" in box 2 are potentially taxable  if not used for qualified educational expenses. So. if he has no other income, he is not required to file a tax return, even if the 1099-Q is in his name and SS#.

Even though you may have used the 529 plan to pay all expenses, you may still claim a tuition credit  by paying a little tax on the distribution.  Read on for details.  

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For 529 plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q. 
The 1099-Q gets reported on the recipient's return.** The recipient's name & SS# will be on the 1099-Q.
Even though the 1099-Q is going on the student's return, the 1098-T should go on the parent's return, so you can claim the education credit. You can do this because he is your dependent.

You can and should claim the tuition credit before claiming the 529 plan earnings exclusion. The educational expenses he claims for the 1099-Q should be reduced by the amount of educational expenses you claim for the credit.
But be aware, you can not double dip. You cannot count the same tuition money, for the tuition credit,  that gets him an exclusion from the taxability of the earnings (interest) on the QTP. Since the credit is more generous; use as much of the tuition as is needed for the credit and the rest for the interest exclusion. Another special rule allows you to claim the tuition credit even though it was "his" money that paid the tuition.
In addition, there is another rule that says the 10% penalty is waived if he was unable to cover the 529 plan withdrawal with educational expenses either because he got scholarships or the expenses were used (by him or the parents) to claim the credits. He'll have to pay tax on the earnings, at his lower tax rate (subject to the “kiddie tax”), but not the penalty.

Total qualified expenses (including room & board) less amounts paid by scholarship less amounts used to claim the Tuition credit equals the amount you can use to claim the earnings exclusion on the 1099-Q. 
Example:
  $10,000 in educational expenses(including room & board)

   -$3000 paid by tax free scholarship

   -$4000 used to claim the American Opportunity credit

 =$3000 Can be used against the 1099-Q (usually on the student’s return)

Box 1 of the 1099-Q is $5000

Box 2 is $600

3000/5000=60% of the earnings are tax free

60%x600= $360

You have $240 of taxable income (600-360)

**Alternatively; you can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. Again, you cannot double dip!  When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. It will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry.

Here's some clarification on a few things.

 - Time spent away from home for the primary purpose of attending school is considered as having lived at home with the parents. So you *will* indicate the student lived with you "the whole year".

 -The undergraduate student's earnings *do* *not* *matter*. The student could earn a million dollars and still qualify as your dependent.

 - There is no requirement for the parents to provide the student any support. Not one single penny. The support requirement is on the student, and *ONLY* the student. That requirement reads:

 If the student did not provide more than 50% of the student's own support, then the parent's qualify to claim the student as a dependent on the parent's tax return"

Take note that scholarships, grants, 529 distrubitons, gifts from Aunt Mary, money from mom and dad, money the student found on the street, etc. is all considered third party support and *do* *not* *count* for the student providing their own support.

THere are only two possible ways the student can provide more than half of their own support.

     1) The student is self-employed or has a W-2 job and was paid sufficient funds to support their claim to providing more than half of their own support.

     2) The student is the *PRIMARY* borrower on a *qualified* student loan and sufficient funds were distributed to the student during the tax year to support their claim to providing more than half of their own support.

Now even with the above two, as an example the student could have earned a million dollars and still not justify providing more than half of their own support. For example, if their qualified education expenses for the year was say, $20,000 for example, yet they received $80,000 in scholarships, grants and 529 distributions, the $20K is applied to the qualified education expenses with the remaining $80K applied to support "before" the student's million dollar income is even considered for their own support. In this scenario, in order for the student to have provided more than half of their own support, they would have had to have paid "at least" $80K of their own money for support. There is no way on this green earth that you will ever convince the IRS that an "undergraduate" had to pay more than $160K to support themselves for the year, I don't care where on the planet you attended college.

Next, if the parent qualifies to claim the student as a dependent (and I'm sure you do qualify) then it does not matter if you actually claim the student or not. the student has no choice and must select the option for "I can be claimed on someone else's return". So the parent has a choice here. But the student flat out does not.