Is this correct usage:
My interests are closely aligned with that of Dr. XYZ.
or does this sound better:
My interests are closely aligned with the work of Dr. XYZ.
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As noted in FumbleFingers' comment, interests is plural, which calls for the plural those instead of singular that. Alternately, one might say (correctly, but a bit clumsily) “My interest is closely aligned with that of Dr. XYZ”.
As intimated by Andrew Leach's comment, “interests are aligned with work” is semantically questionable, but you could say your interests are consistent with the work, or vice versa. You could also say Dr. XYZ's work entails issues with which your interests align, but that is perhaps roundabout.