If you are providing care in your home, he is your household employee. You are required to give him a W-2, and withhold and pay household employee tax (social security and Medicare tax) on your tax return. This will likely offset some or all of the savings from the credit, and he will of course have to report the income on his tax return. (How much tax he will pay will depend on all his other tax information.)
If he provides care in his home, he is self-employed and files a schedule C and must pay income tax and self employment tax.
It would certainly be cleaner if you paid by check and kept the canceled checks as proof (or electronic draft of some kind that creates proof). You are allowed to issue a W-2 based on the barter value of the wages (and in fact are required to do so), but I would at least want to have a written agreement that shows a common understanding of the arrangement. Your brother would also have to be made aware that he will be expected to pay tax, if he was thinking this would be under the table.
