After attending the Springfield Elementary School Christmas pageant, the Simpsons prepare for the holiday season. Marge asks Bart and Lisa for their letters to Santa. Lisa requests a pony, and Bart requests a tattoo. The latter enrages Homer and Marge and they forbid Bart from getting one. The next day, Marge takes the kids to the mall to go Christmas shopping. Bart slips away to the tattoo parlor and attempts to get a tattoo that reads "Mother". With the tattoo partially completed, Marge bursts in and drags Bart two doors down to the dermatologist to have it removed. Counting on Homer's Christmas bonus, Marge spends all of the family's holiday money on the procedure. Meanwhile, at the power plant Homer's very mean-spirited boss, Mr. Burns, announces that there will be no Christmas bonus this year.
Homer, discovering there is no money for Christmas presents and not wanting to worry the family, takes a job as a shopping mall Santa Claus at the suggestion of his friend Barney Gumble. On Christmas Eve, Bart goes to the mall and harasses Santa, exposing Homer's secret. Bart is apologetic for the prank and actually supportive of Homer's moonlighting, remarking "You must really love us to sink so low". After Homer is paid less than expected for his Department Store Santa work, he and Bart receive a dog racing tip from Barney.
At Springfield Downs, Homer, inspired by an announcement about a last-minute entry named Santa's Little Helper, bets all his money on the 99-1 long shot. The greyhound finishes last. As Homer and Bart leave the track, they watch the dog's owner angrily disowning him for losing the race. Bart pleads with Homer to keep the dog as a pet, and he reluctantly agrees. When Bart and Homer return home, Homer finally comes clean to the family that he did not get his bonus, however the family assumes Santa's Little Helper is their present and are overjoyed by Homer's gesture. The Simpsons family then celebrate by singing "Rudolph the Red-Nosed Reindeer".