We moved money out of 401k due to Covid relief package. We paid 10 percent in taxes and now have to pay. We we suppose to not be penalized. What do we do?

You will report this on a Form 8915-E.  The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act.  So this form cannot be included in the TurboTax program.  You will not be able to proceed until the form is available.

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

We estimate it will be sometime in February 2021 before the form is available. 

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Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

You always owe regular income tax on the money. Once form 8915 is ready, you will be able to mark the distribution as Covid related and be exempt from the additional 10% penalty. The withholding that you paid on the distribution will be credited to your account, but you will probably owe additional income tax, because most people pay 15%, 22%, or 24% on their income and you only had 10% withheld.