Paperwork, paperwork -- everyone hates paperwork. And the Internal Revenue Service is no different. In fact, the IRS hates it so much, it's taking steps to encourage Americans to file their taxes online, rather than send in 1040 forms splattered with chicken scratch.

IRS has partnered with several private tax-preparation software providers to offer 60% of Americans free online filing. Who's eligible? That's up to the individual provider. TAXSLAYER.COM is giving the freebie to active military personnel. TaxAct is targeting those who can file the 1040EZ or have an adjusted gross income above $100,000. You can use's services free of charge if your AGI is below $12,000 or if you're 50 years old or beyond. And Intuit's(Nasdaq: INTU) TurboTax is free if your AGI is $27,000 or less, or if you can claim the Earned Income Credit.

To see if you're eligible, visit the IRS's Free File page, and browse the providers or fill out a questionnaire. Even if you aren't eligible, there are many benefits to filing electronically: You'll reduce the chance of mistakes (due to bad calculations or poor handwriting), all forms are easily accessible, and you'll receive your refund more quickly.

However, there are drawbacks. First, even if you're eligible for a free federal filing, you'll have to pay to file your state taxes. Also, expect to be subjected to marketing for other financial services. Most notably, watch for the "refund anticipation loans," which will give you the amount of your refund in cash while you wait for your IRS refund check -- for a price. Unless you desperately need the money, the fees and steep interest rates aren't worth it.