The program is asking questions that apply to a business, i.e. Schedule C, Profit or Loss from Business - your husband's payments were not related to a business operation, For this reason he could not/did not materially participate, was not required to file 1099s and did not have a business code.
To correct this and properly report the 1099-MISC, you will have to remove the business-related forms (Schedule C and any associated worksheets that might have been created) from your return, to include the 1099-MISC that is feeding into Schedule C.
See: How do I delete forms in TurboTax Online?
After removing those forms, you will have to re-enter the 1099-MISC in a way that will not trigger "business" income (Schedule C) and self-employment taxes. The IRS will be expecting to see that income on his return. Then, you will have to enter an offsetting adjustment to remove the amount from you taxable income.
Enter the 1099-MISC information as follows in the 1099-MISC interview:
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Enter the 1099-Misc in the Other Common Income section (Enter "1099 misc" in the Search Box and Select "Jump to 1099 misc form")
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For "Description", enter "Employment Insurance Benefit"
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Also check that it does not involve work like your main job, that it did not involve an intent to make money, and is not a recurring payment (received in the past or expected in the future) (these questions only apply to income he earned from working, not an insurance pay-out).
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The income will be reported on line 8 of Form 1040 of your return (Other income from Schedule 1, Line 9).
To enter the "offsetting adjustment":
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Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" "to get to this screen
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Continue to the screen "Other Taxable Income". Enter the description as "Non-taxed Employment Benefit" and the amount as a negative number. Entering "-$ XXXX" here will offset the benefits included on the Form 1099-MISC. These are NOT wages.
A corresponding negative amount will be entered, and line 8 of Schedule 1, will be zero.
