Since your wife is not an owner of the business but instead receives a W-2, the amount contributed to her 401(k) (both the $26,000 and the employer contribution) account is a Schedule C business deduction (All other expenses -> Pension Plan Contributions). Only the contributions to your own 401(k) account get reported on the Keogh, SEP and SIMPLE Contribution Worksheet and as the self-employment retirement deduction on Schedule 1.
Your wife's W-2 will show $26,000 in box 12 with code D and the $26,000 will be excluded from the amount that would otherwise be included in box 1. Note that total additions to her 401(k) account are not permitted to excess her compensation, so the employer contribution that you make for her from the business cannot be more than the amount in box 1 of her W-2 (assuming that there are no other box 12 items that further reduce the amount that would otherwise be shown in box 1).
