Typically, withdrawing a 401k early has severe tax consequences and any reasonable accountant will not recommend it unless very necessary. This includes an immediate 10% withdrawal penalty along with an immediate 20% tax. The income is then added to your AGI and can bump you up a tax bracket and increase your taxes even further.

However, the covid exemption disregards the 10% penalty and allows you to spread the withdrawal over 3 years (1/3 for 2020, 1/3 for 2021, 1/3 for 2022). This will dramatically decrease the taxes you owe. You don't get to skip out on the taxes you owe, but you only need to add 33% of the withdrawal to your AGI over 3 years.