No, not quite.
I have a TIW card and have been to WDW with other people who pay separately from me. I won't lie, it can get annoying trying to do all the math, but it's worth the savings!
It can get really confusing so be aware you might not always get everything down to the penny correct.
The receipt will itemize all the original costs. Then at the bottom is will say '20% Wonderland Food (x.xx) and if applicable, '20% Wonderland Bev (x.xx)'
Those are the total discount amounts coming off the total bill.
In order to figure out what your MIL will owe:
Take the cost of her items - lets say she had an entree for $20 and a drink for $2. Total of $22.
You take the 20% discount off the total = $4.40 discount
Add 6.5% tax to the original non-discounted amount: $1.43
Add 18% gratuity to original non-discounted amount: $3.96
$22 original amount
+ 1.43 tax
+3.96 tip
= 27.39
- 4.40 discount
= Grand total of $22.99