We would like to get 20,000 dollars from my husbands mom. She will be taking this out of her IRA. Can you tell me how we go about this? She can gift each of us12,000 correct? Will she still have to pay taxes on that?

First, respect to taxes on the gift - there are no tax issues as long as she makes the $20K check out to both you and your husband, or she could send two checks each for $10K - one made out to you and one to your husband.

Your mother in law will of course have to pay income taxes on her withdrawal from her IRA. Depending on where she lives, she may have state and/or local income taxes as well.