Foreign tax reporting is my specialty. I file many Forms 3520, 3520-A, FBARs etc. I work for an international law firm which has many clients whom are foreign or have foreign connections.
1. Yes you file a joint Form 3520 because the funds gifted to your wife were deposited to a joint account. The minimum threshold for reporting is $100K. If the total gifts are under $100K you do not have to file this form. Additionally, because you are filing a joint 3520 you should report your gift as well.
2. If this is your first return you check the box "initial". Don't check the box final unless you are certain you will not be filing in the future. Since you both have foreign family members this may not be your final Form 3520. Do any of the foreign family members have a trust which you or your wife are beneficiaries? If yes, then you will likely be filing a Form 3520 in the future to report trust distributions.
3/4. Form 3520 is not filed with your 1040. It is a paper filed return and filed separately from your 1040. I would recommend filing by certified mail. Also the due date for the 3520 is 4/18. If you extend your 1040, the Form 3520 is automatically extended as well.
5. If you can't fit all the gifts (list each gift by date and amount in the gift section of Form 3520), then you need to attach an additional sheet. This would be the only required attachment. The IRS does not need to know whom the gifts came from. Just list each gift by date and amount.
I hope this helps
