Gift Tax has nothing to do with Income Tax.
The Gift Tax is integrated with Federal Estate Tax.
If you personally own under $5.43 million in total assets, you are this year, and presumably in the future, not liable for Estate Tax. However, the system is set up such that large Gifts made reduce that $5 million figure.
So, each year you, and if married your spouse also, are allowed to give any one individual $14,000 from each of you, thus a married couple can give, for example to a child, $28,000. If the child is married, that doubles up by giving to the child's spouse, for a total of $56,000 [in 2015].
If an individual gives more than the $14,000 to a single individual, the donor is obligated to file a Form 709 Gift Return so that the IRS can keep track with the Estate Tax in mind. Ultimately, even if you give away $1 million in a year to one person, if you yourself have under the $5.43 million, then at your death there would be no Estate Tax liability, assuming that you did not have further increase in your assets. However, nevertheless you would still be obligated in the year of alarge [>$14,000] gift to file Form 709
http://www.irs.gov/pub/irs-pdf/i709.pdf Instructions
http://www.irs.gov/pub/irs-pdf/f709.pdf Form
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