A taxable withdrawal from a tax deferred retirement account is entered on your tax return as ordinary income and taxed at your current tax rate.
The federal taxes withheld for the withdrawal from a tax deferred retirement account are entered on Form 1040 Line 64 as a tax payment (just like from a W-2). The 10% early withdrawal penalty is assessed and entered as a tax liability on Form 1040 Line 59. If your total tax payments are greater than your total tax liabilities you will receive a tax refund for the overpayment. If your total tax payments are less than your total tax liabilities then you will have taxes owed.
