Under these circumstances, neither of you is eligible to deduct a traditional IRA contribution. However, it appears that each of you would be eligible to contribute to separate Roth IRAs. You wouldn't get a deduction for those contributions, but growth in the Roth IRA would be tax-free rather than tax-deferred once the requirements for qualified distributions has been met, and that can be of greater benefit than a deduction for a traditional IRA contribution even if you were eligible for that deduction.
