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My thought is there must be some requirements that such "income" was declared on tax returns as proof that it wasn't a gift or her being forced to spend her money on her kids.

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To protect yourself from all around (from mom in case she gets dementia and no longer remembers this agreement and from Medicaid's lookback), I strongly recommend a written contract. Who best to know what is required? An Elder Law Attorney. They will have the elderlie's best interest. And yes, any income (even doing a side job of hair cutting for $10 per person) must be reported to IRS. Whatever you do, don't rely on say-so.
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See an elder law attorney with a practice in the city where the property is located. What they will likely recommend is a rental agreement (based on local fair market rental rates) and a "personal services" agreement between mom & you to pay you for caregiving &/or managing her affairs (again based on local fair market rates). All this is totally legit expense of your mom and paid from her monthly income & or assets. Now there are tax consequences on all this as you will have income to declare but clearly establishes that it is not gifting or transfer of assets of mom's.

Gifting or transfer will show up in a 5 year look back for Medicaid. If mom could possibly need Medicaid between now and 2019, the gift will cause her to be ineligible for Medicaid just at the time down the road in 2018, 2019, when her level of care needed is beyond what you can do at home anymore.

If you are a professional (like a CPA or a consultant), you can "bill" mom whatever your hourly rate is too if you are doing things for mom that require management of assets.
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I agree... Bookluvr has given you good advice..
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