What does it mean that $3000 in capital tax loss will be used to reduce ordinary income. do u get back $3000?

Question

does the IRS give you back $3000..or what exactly is the meaning of reduce ordinary income

Answer 1

No, it means your taxable income is reduced by $3,000. That means if the last part of your income falls in the 25% bracket you would reduce your tax liability by $750.

Your refund would be based on how much tax you owed and how much you have paid in. If you have paid in more than you owe you will get a refund.

Answer 2

No, the IRS doesn't give you $3000.  It means that up to $3000 of your other income isn't taxed.