In a large mixing bowl, beat the softened unsalted butter and granulated sugar together until the mixture is light and fluffy. This usually takes about three minutes with a hand mixer or stand mixer. Add the egg, alcohol-free vanilla extract, and almond extract, then continue to beat until everything is fully incorporated and smooth.
In a separate medium bowl, whisk together the all-purpose flour, baking powder, and salt. Gradually add the dry ingredients to the butter mixture, mixing on low speed until a soft dough forms. Do not overmix, as this can make the cookies tough instead of tender.
Divide the dough into two equal portions. Wrap each piece in plastic wrap and flatten into a disc shape. Place the dough in the refrigerator to chill for at least 30 minutes, which makes it much easier to roll out without sticking to your work surface.
On a lightly floured surface, roll one disc of dough into a large rectangle about a quarter inch thick. Spread half of the softened cream cheese over the surface, leaving a small border at the edges. Generously scatter the red and green sprinkles over the cream cheese layer.
Carefully roll the dough up tightly starting from the long edge, creating a long log. Wrap the log in plastic wrap and chill for another 15 minutes to firm up. Repeat this process with the second disc of dough. Once firm, use a sharp knife to slice the logs into one inch thick rounds.
Preheat your oven to 350 degrees Fahrenheit. Place the rolls on a baking sheet lined with parchment paper, leaving about two inches of space between them. Bake for 12 to 15 minutes, or until the edges are just barely golden. Let them cool on the pan for five minutes before transferring them to a wire rack.
Whisk together the powdered sugar and milk in a small bowl until smooth. Drizzle the glaze over the cooled rolls and add a few extra sprinkles on top for a festive finish. Let the glaze set for a few minutes before serving.
