if the taxes are paid on money when it's made, the govt can tax it a second time if you give it away??? if the taxes are paid on money when it's made, the govt can tax it a second time if you give it away??? Yes, unfortunately. The gift tax is designed to prevent people from gifting large sums of money to people (most likely heirs) in order to avoid estate taxes. It is rare to see strangers gifting young women large sums of money, as most of the situations with gifts are to children in anticipation of death. Still, the gift taxes apply, even for hush money.