In mixer, beat butter and powdered sugar until combined. Add in flour, salt, nutmeg and anise extract. Mixture will be crumbly, use hands to form a ball. Lay on saran wrap and roll into a log shape. Wrap up tightly and refrigerate for 30 minutes.
Line a baking sheet with parchment paper. Cut slices of cookies 1/4 inch thick and lay on baking sheet. Sprinkle with red/green sugar. Bake in a 350 degree oven for 13-15 minutes. Cool completely and store in air tight container. ENJOY!
Notes
Other options for cookies include scooping dough into 2Tbsp balls, rolling, pressing with the bottom of a glass, then sprinkling with sugars. Bake for 15 minutes (makes about 24 cookies).
Or you can press into a 14x10-inch rectangle and bake for 20-25 minutes. Cut into slices or squares immediately after removing from oven, then cool and enjoy.
Add more or less anise extract for your preference. I usually add closer to 2 tsp anise, but some people enjoy just a hint, at 1 tsp.