Cream butter in a large mixing bowl; gradually add 2 cups sugar, beating well. Add eggs, one at a time, beating well after each addition; add milk, beating well. Stir in almond extract.
Sift together flour, baking powder, and nutmeg in a medium mixing bowl. Gradually add flour mixture to creamed mixture, stirring well after each addition. Cover and chill several hours or overnight.
Divide dough in half, keeping one half chilled until ready to use. Roll to 1/16-inch thickness on a well-floured surface, and cut with assorted floured cookie cutters.
Place 1 inch apart on lightly greased cookie sheets. Sprinkle with additional sugar. Bake at 350° for 10 to 12 minutes. Remove from cookie sheets, and cool on wire racks. Repeat procedure with remaining dough.