In a large bowl, cream together the butter, cream cheese, lemon zest, and lemon juice. Add the sugar and mix until creamy. Add the eggs, lemon extract, and vanilla extract, and mix until light and fluffy.

In a separate bowl, combine the flour, ½ cup of powdered sugar, baking powder, and salt. Gradually add the dry ingredients to the wet ingredients and mix until just combined.

Cover the bowl with plastic wrap and refrigerate for 30 minutes.

Once the dough is chilled, preheat the oven to 350 F. Line a baking sheet with parchment paper.

Scoop 2 tablespoons of cookie dough at a time, forming a ball. Drop each ball into the remaining ½ cup of powdered sugar. Roll the dough ball around in the powdered sugar until it is well coated.

Place the cookie balls on the baking sheet with room to spread, and bake for 11 to 13 minutes. Allow the cookies to cool on a wire rack before serving.