By Tom Herman 

Q: I recall a few years ago some IRS program having to do with an individual giving a gift of up to $10,000, I believe, to a family member, with no tax advantage or disadvantage. Do you recall this program?

J.E.P., Georgetown, Texas

A:I think you are inquiring about a tax-law provision known as the annual gift-tax exclusion amount, which can play a significant role in the estate-planning arsenal of many wealthy people. The amount, which is subject to inflation adjustments, is $14,000 for this year, not $10,000.

For many upper-income Americans, this can be a simple, tax-efficient and generally hassle-free way to transfer wealth to anyone they choose, not just family members. Here is the gist of how it works:

You typically can hand out as much as $14,000 this year to anyone (even a stranger)--and to each of as many people as you wish--without any tax considerations or paperwork requirements. You don't have to report your generosity to tax officials, and the recipients don't owe income tax on your gift--as long as it's genuinely a gift and not a form of disguised payment for goods or services provided by the recipient.

"This is an annual exclusion amount," not a lifetime limit, says Catherine Grevers Schmidt, partner at New York law firm Patterson Belknap Webb & Tyler. "You can give up to $14,000 to each recipient each year. Every Jan. 1, the clock resets, and you can give that person another $14,000."

Some readers may see the word "gift" and wonder whether they can deduct it on their federal income-tax returns. No, Ms. Schmidt says: "There is no income-tax deduction for the donor."

You can't deduct any gifts unless you itemize deductions and the gifts go to genuine charitable and educational organizations. For details, visit the IRS website ( www.irs.gov) and search under "annual gift tax exclusion." For example, see answers to "Frequently Asked Questions on Gift Taxes."

Most Americans don't have to worry about federal estate or gift taxes. For this year, the lifetime exclusion from federal estate tax and gift tax is $5,340,000. (Also, transfers between spouses typically aren't subject to tax.) But even if your estate is much smaller than that, you might find the annual gift-tax exclusion helpful to know about because of state estate-tax considerations.