No, you aren't doing anything wrong. What you have described is consistent with how the "kiddie tax" rules are applied. Electing to report on your return often results in a higher overall tax burden. The instructions for Form 8814 even pre-warn of this fact -
"If your child received qualified dividends or capital gain distributions, you may pay up to $105 more tax if you make this election instead of filing a separate tax return for the child. This is because the tax rate on the child’s income between $1,050 and $2,100 is 10% if you make this election. However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. If any of the above apply to your child, first figure the tax on your child’s income as if he or she is filing a return. Next, figure the tax as if you are electing to report your child’s income on your return. Then, compare the methods to determine which results in the lower tax."
https://www.irs.gov/pub/irs-pdf/f8814.pdf
The reason people make this election is mostly to simplify tax preparation. They would rather just pay the extra tax if applicable then deal with filing separate returns. But, there are some specific unique tax advantages to electing Form 8814 treatment but they are not common - (1) your investment income will be greater, which could lead to a greater investment interest deduction and (2) your AGI limit for charitable contributions is increased. But, they are a lot of disadvantages tax-wise also, which is why it often results in a higher liability.
