In a large mixing bowl, combine the sifted powdered sugar and meringue powder.
Add the warm water and vanilla extract to the dry ingredients.
Using an electric mixer on low speed, mix the ingredients until combined, then increase to high speed and beat until stiff peaks form, about 5 to 7 minutes.
Divide the royal icing into separate small bowls depending on how many colors you want to use.
Add gel food coloring to each bowl and mix until the color is fully incorporated.
Adjust the consistency of the icing by adding a few drops of water to thin or a little powdered sugar to thicken, depending on your desired use (outline or flood).
Use the thicker icing for outlining your sugar cookies, and the thinner icing for flooding the inside of the outlines.
Decorate your sugar cookies by piping designs with the colored icings using piping bags or squeeze bottles.
Allow the decorated cookies to dry at room temperature for at least 4 hours or overnight until the icing is completely set.