In a large mixing bowl, combine the sifted powdered sugar and meringue powder.
Add 5 tablespoons of warm water and the vanilla extract to the dry ingredients.
Using an electric mixer on low speed, mix until the ingredients are combined.
Increase the mixer speed to high and beat the mixture for about 5 to 7 minutes until stiff peaks form and the icing is glossy.
If the icing is too thick, add additional warm water, one teaspoon at a time, until the desired consistency is reached.
Divide the royal icing into separate bowls depending on how many colors you want to use.
Add gel food coloring to each bowl and stir until the color is evenly distributed.
For outlining cookies, thin the icing slightly by adding a few drops of water until it flows smoothly but holds its shape.
For flooding (filling in) cookie areas, thin the icing further by adding small amounts of water until it flows easily but is not runny.
Transfer the icing to piping bags fitted with small round tips or use squeeze bottles for easy control.
Outline the edges of each sugar cookie first, then flood the inside area with the thinner icing.
Use a toothpick or scribe tool to spread the icing evenly and pop any air bubbles.
Allow the icing to dry at room temperature for at least 4 hours or until completely hardened before stacking or packaging.