Hi Rebecca12 - I am British and in US on a J1
1) My experience of tax is similar to the above poster. My school withholds 14% and I file a return in the Spring (and sometimes get something back - but don't hold your breath..) Of course, the 14% relates to federal tax, if you live in state where there is also income tax and your fellowship falls within the bracket then you may be liable for more tax (and your school may withhold more tax). I think that you need to consult with your International Office and also Student Accounting (as opposed to HR Finance, because you will probably not be considered as employed while on a Fellowship)
2) With great regret, there is no US - UK tax treaty (except specific circumstances where you are in US on business and being paid by a company in the UK). It is crazy - when you look at the list of countries that do have a tax treaty that the UK does not have one - but this is the way it is at present.. So as far as I am aware your fellowship will not be exempt from tax. Another thing to consider is whether your school pays out the whole fellowship in advance, twice a year, or every month - as this can also effect how much a big tax deduction might hurt you in the first few months. Again, the Student Accounting office should be able to tell you how they will pay you. With regards to paying tax in UK - I pay none and as far as I am aware, I am not liable to do so. The only thing you might want to keep up is you National Insurance payments - although I think that you may be exempt while in FT education.
3) My spouse lives in US and is employed (J2 visa) - We are both British. As far as I am aware, his employment has not affected my tax at all - however, I imagine that this might be different were your spouse to be earning above average. Other thing to consider is that you are not considered as married (for tax purposes) if you are a non resident alien, so you don't get any of the tax benefits that US married couples might get (if in fact there are any in the grad school scenario)
Hope this is helpful
