Can you believe it? According to the IRS, people have been e-filing their taxes for 20 years.

In fact, 4.2 million tax returns were filed electronically in 1990, the first year the service was offered. Last year, 95 million tax returns, or 66% of taxpayers, filed their returns electronically.

Starting in 2003, taxpayers have been able to e-file for free.

Where to File for Free

According to the IRS, there are three ways to e-file: via tax preparers, through the tax prep apps and products provided by private companies like H&R Block, TurboTax, etc., or through the IRS Free File program.

Tax Preparer

If you hire a tax preparer, these pros can use e-services to file your return for free. If you have a standard Federal and state filing, then last year the average fee for tax preparation varied between $115 to $188.

So, in reality, your Federal filing will still cost you. Also, the charges for filing your taxes are likely to increase for complicated and poorly organized returns.

However, the more complex the tax return, the more benefit you’ll derive from a tax preparer. So, if you’re self-employed, run a small business, or sold a lot of stocks last year, you should probably hire an accountant or other tax pro for the best shot at the most savings.

Traditional Free File Software

This year, you can use tax software to file your Federal return for free if you had an Adjusted Gross Income (AGI) of $57,000 or less in 2009.

The IRS will help you choose a free file company, but here are some of the most popular:

H&R Block — They offer the ability to file your taxes by using their online app, or by downloading their free H&R Block software.

Online: Free package for the most basic tax situations, a Deluxe package for investors and homeowners that costs $29.95, and a Premium product for self-employed people and rental property owners that’s available for $49.95. State filing is $29.95.

Download: $19.95 for Basic, plus $29.95 for State. Download Deluxe is $44.95 and Premium is $59.95. Download Deluxe and Premium packages include State filing.

TaxAct — Claims free Federal filing for everyone, but we have to think this can’t be entirely true — based on the max income level for free filing. Despite this, we can forgive TaxAct because of their low prices. Free for basic, $9.95 for Deluxe, and $17.95 for the Ultimate Bundle – which includes State e-filing.

TurboTax — TuboTax offers a whole suite of tax products at various levels of sophistication for personal and small business use. Both online and downloadable/cd versions are available.

Free Edition. Online only. State is $27.95.

Basic. Online: $14.95 for Federal and $36.95 for State. Buy CD/Download: $24.95 for Federal (e-file up to 5 Federal returns for free) and $19.95 State.

Deluxe. For maximizing deductions. For Online: $29.95 for Federal and $36.95 for State. Buy CD/Download: $59.95 for Federal (e-file up to 5 Federal returns for free). State included.

Premier. For investments and rental property. Online: $49.95 for Federal and $36.95 for State. Buy CD/Download: $59.95 for Federal (e-file up to 5 Federal returns for free). State included.

Home & Business. For self-employed, income from side jobs, sole proprietors, consultants, 1099 contractors, or single-owner LLCs. Online: $79.95 for Federal and $36.95 for State. Buy CD/Download: $99.95 for Federal (e-file up to 5 Federal returns for free). State included.

Business. For S Corps, partnerships, C Corps, or multi-owner LLCs. Only desktop version available. $129 for Federal (e-file up to 5 Federal returns for free) and $19.95 State.

OLT OnLine Taxes — Free Federal and State return filing for everyone 20 and under. For everyone else, Federal and State returns are $7.95 each.

IRS Free File Program

With all of the companies above advertising free e-filing for Federal returns, many people go ahead and do their taxes, only to wonder why they end up getting charged for it at the end. It’s because their AGI was over the limit.

However, even if your AGI is over $57,000, you can still file your Federal return for free.

There are no income limitations if you use the Free File Fillable Forms. You fill in their forms and file them without the tax software. Not recommended for the faint of heart. Of course, this doesn’t apply to State returns, which you’ll have to take care of elsewhere.

What’s the Best Deal?

Well, it depends on the level of support you need.

H&R Block and TurboTax have great prices for people who have more complex tax situation, but can still do their taxes themselves. OLT has some killer pricing for those filing simple returns.