Sofia and Ricardo are the children of Maria, who is Jose's sister. Lupe is Jose's wife, so Sofia and Ricardo are her niece and nephew through marriage to Jose. 

Carlos is indeed a family member of Jose, but by marriage and not by blood. He is Jose's brother-in-law, as he is married to Jose's sister, Maria.
Jose has one sister, Maria. Maria is married to Carlos, and they have two children, Sofia and Ricardo. Jose is married to Lupe. How are Sofia and Ricardo related to Lupe? And, is Carlos a family member of Jose, and if so, what is their relation?

Make your response very short.