Best-Ever Sugar Cookies

Directions

1. In a large bowl, cream the butter, cream cheese and sugar until light and fluffy. Beat in egg yolk and extracts. Combine the flour, salt, baking soda and nutmeg; gradually add to creamed mixture. Cover and refrigerate for 3 hours or until easy to handle.
2. On a lightly floured surface, roll out dough to 1/8-in. thickness. Cut with floured 2-1/2-in. cookie cutters.
3. Place 1-in. apart on ungreased baking sheets. Bake at 375° until edges begin to brown, 8-10 minutes. Cool for 2 minutes before removing from pans to wire racks to cool completely.
4. For icing, in a small bowl, combine the confectioners' sugar, water and meringue powder; beat on low speed just until combined. Beat on high until soft peaks form, 4 minutes. Cover icing with damp paper towels or plastic wrap between uses.
5. Working quickly, spread or pipe icing over cookies; let dry at room temperature for several hours or until firm. Use small new paintbrushes or toothpicks and food coloring to make designs on the cookies. Let stand until set. Store in an airtight container.