Read carefully from the following link:
http://www.irs.gov/publications/p590/ch01.html#en_US_2010_publink1000230549
Look at the example 1 and use worksheet 1-2 to figure out how much you can deduct.
Both of you can contribute $5000 each but the deduction will be limited because of covered regtirement plan and more AGI. Even w-2 did not click (it has some different rule and amount requirement to show), but you and your spouse are still covered as long as the company provides plan to general employees, it does not matter you take part in or not.
