Tim has state income taxes of $4,500 withheld from his salary during 2009. On his 2009 federal income tax return, Tim properly deducts the $4,500 as state taxes paid. Upon filing his 2009 state income tax return, he determines that his actual state income tax for 2009 is only $3,900, and the state sends him a $600 refund. What are the tax consequences of the refund? Explain in terms of the concepts presented in the chapter. How would your answer change if Tim's actual state income tax is $4,900 and he has to pay $400 with his state return?