I think I've answered my own question...
... As soon as I indicate he has received it in prior years and expects it next year, [TurboTax] begins treating it as self-employment income [and] prompts me to answer questions related to self-employment income that aren't relevant and don't make sense for this type of income...
That's actually the answer. Even though he receives it every year, I should only select that he received it this year. I learned in another topic that this is a workaround to TurboTax. I don't think it actually changes anything on the return except it doesn't generate a Schedule C.
