Be upfront about your intentions
Cutting back on the number of potential gift recipients on your list is fine, says Jodi R.R. Smith, president of Mannersmith Etiquette Consulting. The key to doing it right is all in the way you communicate your plans. "Waiting until I'm at a holiday gathering and people are handing me gifts to tell my sister-in-law I've decided not to give her (one) this year is too late," Smith says.
She suggests that you tell those with whom you usually exchange gifts well in advance that you're forgoing the custom this time around so they can adjust their own shopping lists. Smith says most people are grateful for the chance to cut back.
Also, remember that gift-giving doesn't always have to be quid pro quo. If you made it clear you're not buying someone a gift and you end up with a beautifully wrapped package anyway, thank the gift-giver and give yourself permission to skip the holiday trepidation.