Yes. A 401K withdrawal is 100% taxable unless it's in a ROTH 401K. And there is a 10% Early Withdrawal Penalty if you are under 59 1/2. But the penalty might be suspended for 2020 due to the Covid-19. Can you take a loan from it instead of a withdrawal? You don't report loans.
They will take out tax withholding on the withdrawal. That's just like withholding from your paychecks. You will get a 1099R at the end of the year to enter into your tax return 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.