Per IRS Pub. 525, https://www.irs.gov/pub/irs-pdf/p525.pdf p. 35, Holocaust reparation payments are not reportable and therefore not taxable. Same would apply to your New York taxes.
If you and your wife file separately, then you will each have your own return and your own AGI (Adjusted Gross Income). Please see the following link for more information on filing MFS vs. MFJ:
https://turbotax.intuit.com/tax-tips/marriage/should-you-and-your-spouse-file-taxes-jointly-or-separ...
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