No taxes on Social Security

Hello - 

When I entered my Social Security, the app showed no taxes due.  Check.

When I added my 1099R, I was taxed on the full amount at the 12% rate.  So my question is, if Social Security is not taxable is it included in my total taxable income?  Something is off - we should have gotten the standard deduction of $34,700 and paid the tax on the difference between my 1099R and the $34,700.  It's like I didn't get my standard deduction at all.  Any help understanding this is appreciated.