I just got my paycheck for a shoot I did two weeks back, but for first time for me, my kit rental got lumped together with my day rate. And the payroll company (CAPS, LLC Payroll service) taxed my kit rental in the process. Usually, when I work on a production that receives W-4s, my kit fee is paid nontaxed separately while my dayrate gets the usual taxes deducted.
So is this incorrect, or is the payroll company allowed to do that?