The distribution from your 401(k) should have been reported on your tax return. The 10% taxes you "paid" when you took the money out was withholding, just like with your wages -- and may have been more or less than you really owed on this income (but is usually less).

You want to get someone to check the IRS's arithmetic, but yes, you could owe that much on your distribution. It would depend on how much taxable income you have on your tax return -- which would put you into the 15%, 25%, 28% or higher income tax bracket. It would also depend on if you were under age 59 1/2 at the time of the distribution (subject to 10% penalty). There is now a year's worth of interest on that tax, too.

Make sure the IRS is giving you credit for the 10% withholding you had. They're usually pretty good about that, but it doesn't hurt to be sure.

If you used that money for a specific purpose (other than "catching up on our bills") then you might be eligible for an exception to the 10% early distribution penalty. Again, this would be a good one to discuss with a tax preparer.

Next bit of bad news -- if you didn't report the distribution on your federal return, you probably didn't report it on your state return, either, and now you're going to owe the state, too.