Not until recently did I realize that not all my friends know how to file tax online (if you're happy with paper, don't bother to read this). Because of this, I would like to share with you a little catch on this.
To file your federal tax, you should try to use Free File provided by IRS. As long as your adjusted gross income is less than or equal to $54,000 in 2007, you can file your federal tax for free. After clicking "Start Now!" on that Free File page, you will need to choose from a list of tax preparation companies. I've been using TaxCut from H&R Block and it worked pretty well. (TaxCut also requires you to be 50 years age or younger and TurboTax requires you to be on active military service. If these requirements don't work for you, you may want to choose some other tax preparation company from that list)
Now, the catch is that you should NOT also use those tax preparation companies to file your California state tax (they'll charge you to file state tax). Instead, use CalFile. Of course, you have to satisfy their requirements to use it but most likely you do.
If you know some other smart ways to file tax, please leave a comment :)