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The phrase "laughing that" is correct and can be used in written English.
It is typically used to indicate the reason or cause behind someone's laughter. Here is an example: "I couldn't help but join in on the laughter, the comedian's joke was just too funny. It was the way he imitated his dog that had us all laughing." In this example, "laughing that" is used to explain the reason for the laughter, which was the comedian's imitation of his dog.
Exact(57)
Baker: (laughing) That is total, total BS.
Luis Suárez was laughing: that was just silly.
Yeah, I say, laughing, that kind of place.
"Phew," I say laughing, "that is a relief".
He's now a contributor to the talking, bickering, conspiring and laughing that make up their play.
But Samantha, inappropriate as she knew it was, couldn't stop laughing that night at Popeye's.
"I understand that he was laughing that day, on the way to the towers.
"I think Teddy would say we are members of a party," Mr. McCain said, laughing, "that has a big tent".
Similar(3)
("We tried," Schwartz says, laughing. "That didn't go over very well" with retailers).
[Laughing] That was my toughest moment of the year.
Cronenberg [laughing]: That was so disappointing.
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com