Islam is the religion of mercy, piety and maintaining relations. One of the most important obligations upon Muslims at the present time is to show the beauty of Islam and be its best representatives through both manners and actions.
Islam does not command you to sever ties with your family or friends, be hostile or hate it; rather, it commands you to treat your family members and your friends in a good manner. There is a big difference between hating disbelief as Allah ordains such that a Muslim prefers to be sent to Hellfire to leaving Islam and between hating people and his family, treating them as enemies because they are non-Muslims and hating everything around him even the land in which he was born.
This corrupted meaning of detestable hatred is irrelevant to Islam, the Prophet [pbuh] and Islamic civilization which spread the religion of Islam all over the globe. Islam does not command us to hate people but to love them because they are the creations of Allah. Moreover, man is the creation of Allah, and cursed are those who destroy him because Allah created him with His own hands, breathed of His own spirit into him and made His angles prostrate to him. For this reason, respecting humanity is an angelic characteristic; consequently, Allah Almighty commands us to love people, maintain ties of kinship, treat others well, speak good words, give friendly smiles and maintain good companionship. It is through these means Islam spreaded in the East and West and captured people's hearts with love before overcoming their lands.
Dear brother, behave as you normally would and be yourself, since Islam likes munificence and the good spirit that brings happiness, optimism, hope and affection. Treat your family and friends with all good manners and do not settle for a phone call to congratulate them. Share their happiness and celebrations provided they do not involve any religious rites or practices that contradict Islam.
There is no legal impediment to participating in celebrating the birth of Jesus (peace be upon him). Islam is an open system and its followers believe, respect and honor all the prophets and messengers, and treat the followers of other religions with kindness in accordance to the words of Allah the Almighty:
And dispute ye not with the People of the Book, except in the best way. [Al-'Ankabut, 46]
Jesus the son of Mary, peace be upon him, is one of the Prophets who are characterized with determination, resolution and patience. Prophet Muhammad [pbuh] said: "I am more entitled to Jesus the son of Mary than anyone in this life and in the Hereafter; no prophet has been sent between us." Every Muslim believes that Jesus is a human prophet who performed great miracles, such as reviving the dead and curing the sick by the will of Allah the Almighty. This was not because he was a god or the son of God in the sense of physical procreation—Allah is exalted above this. Celebrating the day of the birth of Jesus is an act of belief regardless of Christian convictions in his regard. Therefore, participate in your friends and family's celebrations, eat with them and refrain from eating pork and drinking alcohol with tact and civility. Do not pay any attention to anyone who wants to ruin the relation between you and your family and others in the name of Islam because Islam is free from all of this.