Matt, single, lives in Michigan and uses the cash method of accounting. In April of 20x7, he filed his 20x6 Michigan state tax return, and had to pay in an additional $1,000 in 20x6 state income taxes. During 20x7, he had Michigan income tax withheld of $5,000. In April of 20x8, he filed his 20x7 Michigan tax return claiming a refund of $500, which he received in May of 20x8. If he has $20,000 in itemized deductions for 20x7: What should Matt take as his state income tax deduction on his 20x7 Federal income tax return (filed in April 20x8)? How should Matt treat the $500 refund in 20x8