I was helping my daughter through doing her taxes. In addition to earned income of around $1.6k, she received unemployment benefits totaling ~$16k, plus she had bank interest of around ~$700 (sign up bonuses) in 2020. I understand the unearned income is subject to the "Kiddie Tax" which means it's taxed at the marginal rates of her parents (my wife and I), which is firmly in the 22% bracket.
We entered in all my daughter's information, and it did prompt to enter income information for her parents for the 8615 portion, and it passes all the checks and is ready to file, but it's telling her she has a "Blended Tax Rate" (effective tax rate?) of 31%, and shows that her total tax is $5172 on $16653 of taxable income, which does work out to 31%. But I don't understand how it can be so high when my tax bracket, which the majority of her income would be based on due to Form 8615, is 22%.
See screenshot below for the TurboTax breakdown. This is after everything was entered and TurboTax said it was ready to file.
