Preheat the oven to 350°F (175°C). Line 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, using an electric mixer, cream the softened unsalted butter and granulated sugar together until light and fluffy, about 3 minutes.
Add the egg, vanilla extract, and almond extract to the butter mixture and beat until combined.
Mix in the sour cream until fully incorporated.
Gradually add the dry ingredients to the wet ingredients, mixing on low speed until just combined. Do not overmix.
Divide the dough in half, wrap each half 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 trees, stars, and snowflakes) to cut out shapes. Place the cookies 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 cookies to cool on the baking sheet for 5 minutes before transferring to a wire rack to cool completely.
To prepare royal icing, combine the powdered sugar, meringue powder, and water in a mixing bowl. Beat on low speed until combined, then increase speed to high and beat until stiff peaks form, about 5 minutes.
Divide the royal icing into separate bowls and tint with food coloring as desired.
Use piping bags or squeeze bottles to decorate the cooled cookies with the colored royal icing.
Add assorted Christmas-themed sprinkles to the wet icing for extra festive decoration.
Allow the decorated cookies to dry at room temperature for at least 4 hours or overnight before storing.