Mix butter and cream cheese until creamy. Add sugar and beat until fluffy. Add egg and vanilla, beat well. In a separate bowl, whisk flour and baking powder. Gradually add to the butter mixture. Divide dough in half and chill until easy to handle.
Roll out dough on a lightly floured surface to about 1/4 inch thick (don't roll too thin). Cut desired shapes. Transfer to a baking sheet and bake at 375 degrees for 8-10 minutes (do not overbake). Cool completely before frosting.
2 tbsp. butter, softened 1/4 tsp. vanilla extract
2 cups powdered sugar 1/4 tsp. almond extract
2-4 tbsp. milk
Beat butter until creamy. Beat in extracts. Add powdered sugar gradually, adding milk to consistency.
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