My total401k withdrawal before taxed was 40,263. 8,052 of that was a federal tax withheld. I only received 32,211. Why am I being taxed on the whole 40,263 again now?

The amount of the distribution entered in box 2a is the taxable amount entered on your tax return.  The federal income taxes withheld shown in box 4 of the form are entered on your tax return as a tax payment.  This is no different then the W-2 entries made for wages from an employer.

The distribution is included with your other income and taxed at your current tax rate.

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 you will have taxes owed.