If my mother in law pays off a car loan will that be something she and I both will have to claim?

[xmasbaby0]

Neither one of you reports it.  Paying off a car loan is not deductible.  A gift to an individual is not deductible, so if she paid off your car for you, it is not taxable to you nor deductible for her.  Generous--yes.  But not deductible.  If she gave you over $14,000 to pay off the car, she may need to fill out a gift tax form 709.  She will not have to pay tax for the gift but any gift over $14,000 is added to the amount you are allowed to gift over your lifetime.  (About $5.4 million before it becomes taxable)

Turbo Tax does not support the gift tax form 709, but here is a link:

https://www.irs.gov/pub/irs-pdf/f709.pdf