When one of the graphene layers of Magic Angle Twisted Bilayer Graphene is nearly aligned with its hexagonal boron nitride substrate (a configuration dubbed TBG/hBN), the active electronic bands are nearly flat, and have a Chern number $C=\pm1$. Recent experiments demonstrated a quantum anomalous Hall effect and spontaneous valley polarization at integer filling $\nu_T=3$ of the conduction band in this system. Motivated by this discovery, we ask whether fractional quantum anomalous Hall states (FQAH) could also emerge in TBG/hBN. We focus on the range of filling fractions where valley ferromagnetism was observed experimentally. Using exact diagonalization, we find that the ground states at $\nu_T = \frac{10}{3}$ and $\nu_T=\frac{17}{5}$ are fractional Chern insulator states in the flat band limit (in the hole picture, these are the fractional quantum Hall fractions $\frac{2}{3}$ and $\frac{3}{5}$). The ground state is either spin polarized or a spin singlet depending sensitively on band parameters. For nominally realistic band parameters, spin polarization is favored. Flattening the Berry curvature by changing a band parameter gives way to the spin singlet phase. Our estimation of the charge gap in the flat band limit shows that the FQAH state may be seen at accessible temperatures in experiments. We also study the effect of a non-zero bandwidth and show that there is a reasonable range of parameters in which the FQAH state is the ground state.