Yes, you were overpaying all year, and getting it refunded later. The EIC would have "paid" your taxes for you, so you didn't need tp withhold federal income tax.

The way to look at it is this: Tax liability, minus tax credits, remainder is all you need to withhold. So if your tax credits are greater than the liability, stop withholding. IT's just giving them your money, and waiting to get it given back.