Deductions & credits

Sorry, I left out a very important word in my last comment.  I meant to say the unearned income would NOT increase the Standard Deduction like a taxable scholarship would.

The software is doing it correctly.

The $1381 is unearned income.  So the Standard Deduction consists of $1631 of earned income, plus $350 (for unearned income).  The total Standard Deduction should be $1981.