The combined IRA contributions are limited to the amount in box 1 of the W-2. That appears to be $10,000, so there would be $4,000 of excess contribution if $7,000 was contributed to each spouse's IRA. However, if the 401(k) contribution was to a designated Roth account in the 401(k), that contribution would not reduce the box-1 amount, making $34,000 available to support IRA contributions.
