If you did not pay enough taxes on your unemployment during the year, you may have to pay taxes on it when you complete your tax return. The IRS considers unemployment compensation as taxable income, as do most states. When you combine it with your other income received during the year, it will be taxed at whichever tax bracket you are in.
The difference between what your tax liability is and what you withheld is the amount you owe. Since you stated that you owe taxes and your refund went down after entering your unemployment compensation, your tax bracket is higher than the percentage you withheld on your unemployment.
TurboTax has a great tool that can help you withhold the correct amount of tax on your income sources. Please see Tax Bracket Calculator for a better estimate on what should be withheld.
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