My wife for 5 years is illegally here in the usa. We have 3 boys who are american citizens
What can I do to fix her legal status and what penalties should we worry about? Thank you for any help that anyone can give me

You could worry about her being sent back to her native country, ( penalty) or having to return them to request proper paper work to enter the US.

You need an immigration attorney at this point to help you try and get her a valid visa to be in the US to start

You say she is illegal in the US; how so? Where is she from and how did she enter the US? Did she use a valid visa and overstay? Has anything ever been filed for her before?