Preheat the oven to 375°F (190°C). Line baking sheets with parchment paper.
In a medium bowl, whisk together the all-purpose flour, baking soda, and baking powder. Set aside.
In a large bowl, cream the softened unsalted butter and granulated sugar together until light and fluffy using an electric mixer, about 3-4 minutes.
Beat in the egg, vanilla extract, and almond extract until well combined.
Gradually add the dry ingredients to the wet ingredients, alternating with the milk, beginning and ending with the dry ingredients. Mix until just combined.
Divide the dough in half, shape each half into a disk, wrap in plastic wrap, and refrigerate for at least 1 hour.
Roll out one disk of dough on a lightly floured surface to about 1/4 inch thickness.
Use cookie cutters to cut out desired shapes and place them 1 inch apart on the prepared baking sheets.
Bake for 8-10 minutes or until the edges are just starting to turn golden. Remove from oven and let cool on the baking sheet for 5 minutes, then transfer to a wire rack to cool completely.
Repeat rolling and baking with the second disk of dough.
To make the royal icing, combine the sifted powdered sugar and meringue powder in a large bowl.
Add warm water and beat on low speed until combined, then increase to high speed and beat until stiff peaks form, about 5-7 minutes.
If desired, divide the icing into separate bowls and add food coloring to each, mixing well.
Use immediately to decorate cooled cookies or cover tightly with plastic wrap to prevent drying.
Decorate the sugar cookies with royal icing using piping bags or spreaders. Allow the icing to dry completely, about 4-6 hours, before storing or stacking.