My 18 years old daughter is starting College and just had a baby, they live with us and she was able to get a Pell Grant from fafsa. Can we claim her and her baby on our taxes next year? Will that affect her Pell grant approval?

You CAN claim her and the child, as you have provided more than HALF of the total support for her and the child.

It MAY or MAY NOT affect the Pell Grant. It depends on your income level.