I received the grant from the arts commission in my state, and was of the understanding that COVID-19-related grants to individuals are tax-free under the general welfare exclusion, though I just received a 1099-MISC form from the state with the full grant amount listed in Box 3 "Other Income". Normally, I know you are required to include all 1099-MISC forms when filing, but as far as I know, it's not possible to input the info without Turbotax automatically including the amount as taxable income.
Grants to households (i.e., individuals) are taxed differently than grants to small businesses. As explained below, need-based grants to households likely fall under the general welfare exclusion, and are therefore not taxable, whereas grants to small businesses are likely not covered by this exclusion, and would be taxable.
You can add it as other income and then back it out again with an explanation. "Incorrect 1099-MISC. Nontaxable Relief Grant"