Hi Kathleen,
What better place to celebrate your family and our country's freedom then Disney World. We did the same thing a few years ago, and you are right both Magic Kingdom and Epcot offer an amazing fireworks show in honor of Independence Day.
I actually prefer the fireworks at Magic Kingdom. I think the show has a little more wow factor to it typically, and there is something about standing on Main Street USA surrounded by my family, watching the fireworks as they light up the sky over Cinderella Castle. It gives me goosebumps everytime. However, a word of caution, Magic Kingdom will most likely be extremely crowded. It is typically the Disney World park that draws the largest crowds and was at capacity level the two times we were there for this holiday. If you plan on spending the evening here, you will want to arrive early and stay for the day. If the park reaches capacity, you will not be able to get in to watch the show.
The other thought is to head to Epcot. While the crowds will be almost as large, the park (and especially the area around World Showcase where the show is presented) is much larger and roomier and therefore will not feel as congested. There is a bigger amount of space for guests to spread out at Epcot and often it feels a good deal less crowded than the other parks, even at capacity. The other advantage to Epcot is, if you are staying at one of the resorts off of the World Showcase (Boardwalk, Yacht/Beach, Dolphin or Swan) you will be able to walk back to your resort after the show and avoid the crowds on Disney transportation.
If you are up for two late, crowded evenings you may be able to enjoy both shows. The past few years Magic Kingdom has actually presented its special show on both nights and you could always head to Magic Kingdom on the 3rd and Epcot on the 4th. Just be sure to check with your resort on this option.
Wishing you a magical time!