I am a research scholar from india working at los alamos national lab, NM on j1 visa (non residents). My employer is taking federation as well as state tax and considering us a single with one allowance for filling these tax. Can I get the tax treaty benefit for first two year. My family (wife and child) is also with me on j2 visa. So what are the refund I can claim if I can't take the tax treaty benefit.

On J-1 you are nonresident for two years and do not pay SS tax and Medicare tax.
If your visa shows that you entered as Researcher, as per tax treaty, your income is exempt from federal income tax for two year. Read IRS Publication 901. Tax Treaties.
You will file nonresident tax return and Form 8843. Your U.S. Tax Return: U.S. Tax Filing Requirements for Non-Residents (http://taxipay.blogspot.com/2008/03/us-tax-filing-requirements-for-non.html)