You don't have to consider the payments as income as long as it's being used to offset the expenses for caring for your brother-in-law.
From what you've mentioned, your brother-in-law is probably not your dependent. He would have to be considered a "qualifying relative." and I'm not sure if he would pass the gross income test or the support test, described below.
To claim your brother-in-law as a dependent he needs to meet the following requirements for "qualifying relative":
- Not a qualifying child - He is not your child, so you're OK here.
- Member of household or relationship test – Certain relatives don't necessarily have to live with you but since he does you're OK.
- Gross income test - To meet this test, his gross income for the year must be less than $4,200. Gross income is all income in the form of money, property, and services that isn't exempt from tax.
- Support test - To meet this test, you generally must provide more than half of his total support during the calendar year. You figure whether you have provided more than half of his total support by comparing the amount you contributed to his support with the entire amount of support he received from all sources. This includes support he provided from his or her own funds
