Preheat the oven to 350°F (175°C). Line two baking sheets with parchment paper.
In a medium bowl, whisk together the all-purpose flour, baking soda, baking powder, and salt. Set aside.
In a large bowl, beat the softened unsalted butter and granulated sugar together with an electric mixer on medium speed until light and fluffy, about 3 minutes.
Add the egg, vanilla extract, and almond extract to the butter mixture and beat until combined.
Gradually add the dry ingredients to the wet ingredients, mixing on low speed until just combined.
Add the sour cream and mix until the dough comes together. Do not overmix.
Divide the dough into two equal portions. Wrap each portion in plastic wrap and chill in the refrigerator for at least 1 hour.
On a lightly floured surface, roll out one portion of dough to about 1/4-inch thickness.
Use Christmas-themed cookie cutters (such as stars, trees, and snowflakes) to cut out shapes and place them 1 inch apart on the prepared baking sheets.
Bake the cookies for 8 to 10 minutes, or until the edges are just beginning to turn golden.
Remove from the oven and allow the cookies to cool on the baking sheet for 5 minutes before transferring to a wire rack to cool completely.
To prepare the royal icing, combine the powdered sugar, meringue powder, and warm water in a large bowl. Beat on high speed until stiff peaks form, about 5 minutes.
Divide the royal icing into three bowls. Tint one bowl with red gel food coloring, one with green gel food coloring, and leave one bowl white by adding a small amount of white gel food coloring if desired.
Transfer each colored icing into separate piping bags fitted with small round tips.
Decorate the cooled sugar cookies with the royal icing, creating festive designs such as outlines, dots, and fills. Allow the icing to dry completely, about 4 hours or overnight, before storing.
Store the decorated sugar cookies in an airtight container at room temperature for up to 1 week.