You cannot claim her as a dependent because she provides more than half her own support.
She is subject to the kiddie tax because she is a full time unmarried student (and not an orphan), under 24, who does not provide more than half her own support with earned income.
The way around the kiddie tax is to get the stipend classified as earned income. Currently it isn't earned income.*
*Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $13,850 filing requirement and the dependent standard deduction calculation (earned income + $400). It is not earned income for the kiddie tax and other purposes (e.g. EIC). For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.
