The trust income tax brackets are only used on investment income over $2,100 per year. Which is possible with a pretty healthy UTMA.
The 37% trust bracket starts at $12,500 per year.
I do not know how ordinary income and investment income stack for purposes of the $2,100 and $12,500 numbers. I would hope that they do not stack and she would pay regular income and SS taxes on her earned income, then capital gains on the first $2,100 of investment income, then trust rates on the rest of investment income. But it could certainly be different.
If your daughter is going to college soon, the bigger hit could be to her FAFSA financial aid picture. Earned income by the student usually is "taxed" at 50% via an increase in EFC and a reduction in aid.
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