Preheat the oven to 375°F and lightly grease a cookie sheet.
In a large bowl (or kitchen aid), cream butter, cream cheese, egg, powdered sugar, almond extract, and peppermint extract, until fluffy.
In a separate smaller bowl, combine flour, baking powder, and salt. Add dry ingredients to the creamed mixture. Stir until soft dough forms.
Taking care not to handle the dough too much, roll out the dough to ⅜ inches thick and cut with a cookie cutter.
Place on a greased pan, and bake for 8-10 minutes. Let cool.
While baking, mix butter, powdered sugar, milk, vanilla extract, and peppermint extract with a hand mixer. Slowly add more milk if the frosting is too thick.
Frost cooled cookies and, if desired, sprinkle with crushed candy canes. Enjoy!