Yes, sort of.  

 

You didn't actually pay the tax or 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½).  You had taxes withheld like from your paycheck. You still have to enter the whole gross original amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due.

 

It has to break out and show the 10% penalty separately on your return, (Schedule 4 line 59 which goes to 1040 line 14)

Then you get credit for all the withholding taken out on 1040 line 16.

Thank you for your answer! So $11,095 was withdrawn but I actually received in cash $10,000. So that $1,095 will go towards my 10% penalty but the whole $11095 will be added to my overall income and tax accordingly?

Thank you for your answer! So $11,095 was withdrawn but I actually received in cash $10,000. So that $1,095 will go towards my 10% penalty but the whole $11,095 will be added to my overall income and tax accordingly?

Yes...that is how it is done.