The credit can't be more than your tax liability. That is not the same as owing or getting a refund. Your tax liability is what the IRS gets to keep at the end of the year. For example, if you have $3000 of withholding and you get a $500 refund, your tax liability was $2500. If your withholding was $2000 and you owe $500, your liability is still $2500. The credit also can't be used to offset self-employment tax or any of the penalties (like the 10% penalty for withdrawing an IRA early).
Look at form 1040. Line 18 is your taxes. Line 19 and 20 are various credits. Line 22 is your tax liability. If line 22 is zero, then you either have no tax liability, or your tax liability was covered by all your credits, and you can't get any more credit. Also look at schedule 3, Line 5a and line 5b. That is the amount of credit you are using this year.
If your income is low, or you have lots of other credits, you may not owe enough tax to use the credit this year.
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