In a large mixing bowl or the bowl of a stand mixer, beat the softened unsalted butter and granulated sugar together until the mixture is light and fluffy. This usually takes about three to five minutes on medium speed. Scrape down the sides of the bowl to ensure everything is well incorporated before adding the egg and the alcohol-free vanilla extract. Continue beating until the mixture is smooth and pale in color.
In a separate medium bowl, whisk together the all-purpose flour, baking powder, and salt. Gradually add the dry ingredients to the wet mixture while the mixer is on low speed. Mix just until the dough comes together and no streaks of flour remain. If you want to make a chocolate version of some cookies, divide the dough in half and fold the cocoa powder into one portion at this stage.
Wrap your dough portions tightly in plastic wrap and flatten them into discs. Place them in the refrigerator for at least one hour, or up to two days. Chilling is a vital step because it prevents the cookies from spreading too much in the oven and makes the dough much easier to handle when you are cutting out festive shapes.
Preheat your oven to 350 degrees Fahrenheit and line your baking sheets with parchment paper. Roll out the dough on a lightly floured surface to about a quarter inch thickness and use your favorite holiday cutters to create stars, trees, or circles. For thumbprint cookies, roll small balls of dough and press your thumb into the center before adding a small dollop of jam. Bake for 10 to 12 minutes or until the edges are just barely golden brown.
Allow the cookies to cool completely on a wire rack before decorating. You can dust the shortbread with confectioners sugar, dip half of the chocolate cookies into melted white chocolate, or add sprinkles to the edges. Once everything is set, find a sturdy box and use cupcake liners or small strips of cardboard to create sections. Carefully nestle each variety of cookie into its own space, ensuring the heavier cookies are at the bottom to prevent breakage.
