The amount of the taxes you paid in at withdrawal is an 'estimated' tax. There is no way for them to know your 'adjusted gross income for your income tax until you file your tax return. So they only take out what is called an 'estimated tax' amount.

When you file, there is a separate line for you to add the distribution total amount. You will receive a statement from your 401K Company, showing the amount of the distribution and the amount of tax paid. This is the same form they use to report this information to the IRS.
You will use this form to add the distribution as income to your tax return. There is a line on your tax return to enter this amount. There is also a line to report the amount of taxes you've already paid that will become a credit for you on taxes. You will only be charged the amount of tax not already paid.
This is important to remember: If you withdrew your 401K with an outstanding loan againest the balance of the 401k ie. you borrowed money from your account and were paying it off then took the distribution..you will be paying taxes on the entire distribution. Here's how it works:

You have a 401K with a balance of 20,000.00 You take out a loan in June 2009 for 2000.00
You start paying back a little each month to your 401K in the form of loan payments. You decide to withdraw the entire balance of 18500.00 from your 401K. Your distribution will be taxed for 20,000.00. You always have to rembember all money put into a 401k are tax free dollars. If you receive the money, the taxes are due.

The company ( administrator) will send you a 1099R to file with your taxes. It looks similar to a W-2.
Box one will show the distribution amount. .. box 2 the taxable amount (any that you did not roll over, probably the same as box 1)
It will also show the taxes already withheld. There is a separate portion of your tax return that will ask for this information
If you did not ask the administrator to withhold more than the standard 20% expect to at least pay another 10% early withdrawal penalty if you are under 55---