I am 62 and will begin taking retirement benefits this year. I have a 14 year old daughter and my wife is 60. Both will be able to begin receiving benefits on my record. The earnings test is not an issue for me (or my daughter) but my wife will continue to work . Will my wife be subject to the earnings test while receiving her child in care benefit (i.e. for 2 years until my daughter turns 16)? If so, and my wife loses some of her benefit, might my daughter's benefit increase if we were being limited by the Family Maximum Benefit? If my wife were to have her benefit reduced by the earnings test would that lost benefit be restored at FRA?
Yes, your wife's child in care spousal benefits will be subject to the Social Security earnings test if she earns more than the exempt amount (https://www.ssa.gov/planners/retire/whileworking2.html). If your daughter's benefit rate is reduced due to the family maximum as a result of your wife's entitlement, your daughter could be paid up to her full rate for any months that your wife loses her benefits due to the earnings test.
The benefits that your wife loses to the earnings test wouldn't be 'restored' at full retirement age (FRA). Child in care spousal benefits aren't reduced for age in the first place, so no rate adjustment is involved if benefits are withheld for some months as a result of the earnings test.
You and your wife may want to consider using the maximization software available on this website in order to determine your best filing strategy.