Gift Tax Liability

If the gift tax goes over the $675,000 (this year) exclusion, how is the tax liability figured for the donor and is the recipient also taxed? Where is this reported on the 1040/1040A and does the liability go on percent or table like income tax?

A gift tax is paid by the Donor (gift giver) for lifetime gifts totaling over $675,000. Gifts over $10,000 are reported on a gift tax return (Form 709), not the 1040. The gift tax rate starts at 37% for the first dollar over $675,000 and increases in a graduated manner to a top rate of 55% (at the $3 million mark).

The gift tax rate is the same as the estate tax rate (called the unified gift and estate tax). You can use your lifetime credit of $675,000 during your lifetime by gifting or at death your estate receives a $675,000 credit against estate taxes.

The donee (gift recipient) is not taxed.