I think the way it would work…assuming no IRA sales…is that it is a tax credit regardless of how much you have already paid in for the year. So if your tax liability for the year is $6,000 (regardless of you possibly already paying in $5500) then your credit would go against the $6000 making it zero and you would lose out of the remaining $1500 availble ccredit. The $5500 you already paid in taxes during the year would be a refund back to you for that tax year. To get the full tax credit, you would need to make sure your fed tax bill for the year is 7500 or more…meaning convert some trad IRAs to Roth IRAs as mentioned above.
