After you file
Schedule K-1's for trusts would be reported under the Business Items section in Wages & Income. You would need to select start to the right of Estates or Trusts (Form 1041) to ensure your Schedule K-1 is reported correctly.
In regards to the amounts reported on your Schedule K-1, while you have the interest income, you also have income from the trust's portfolio or nonbusiness income being reported to you on Line 5. This amount is causing the higher tax due on your personal return as this is additional income that you need to report based upon the Schedule K-1.
The amount listed on Line 14 is actually not an offset to your positive income, but is used to determine if you have any net investment income tax that would be reportable on Form 8960. If your investment income exceeded the threshold based upon your filing status, then you would have been subject to an additional tax on your investment income.
