What I did with mine was that when they mentioned Santa, I would tell them the truth. Lying is a sin. And they need to trust us because if Santa can be fake and we make them believe that, they will think Jesus is fake too. Our credibility is at stake.
This is what I say:
"So the truth is that Santa was actually St Nicholas -- he was a very good guy and this is what he did for the kids who couldn't afford toys but then he died a long time ago. People today just want to remember his contributions but the way they did it took away the true meaning of Christmas of Jesus and His birth. And that's why we don't do Santa. But other kids do, and their parents lie to them about it. But we must not interfere with what other parents say to their kids. So if someone asks, it's ok to say that we just don't do Santa. We do Baby Jesus."
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