In a medium bowl combine flour, baking powder, cinnamon and nutmeg; mix well with a wire whisk and set aside.
In a large bowl, cream sugar and butter with an electric mixer. Add eggnog, vanilla and egg yolks and beat at medium speed until smooth. Add the dry ingredients and beat at low speed just until combined.
Drop by rounded teaspoons onto parchment lined baking sheets, 1-inch apart. Bake for 21-24 minutes or until bottoms turn light brown.
Transfer to cool, flat surface immediately with spatula. Makes about 36 cookies.
For the Eggnog Icing: In small mixer bowl, beat the powdered sugar and butter until well blended. Gradually beat in eggnog until icing is smooth and the desired consistency. You may need less or more depending on the consistency you like. Sprinkle lightly with nutmeg after you ice the cookies. I used a sifter/strainer to gently sprinkle nutmeg on top. A little goes a long way when it comes to nutmeg. Makes about 1 1/2 cups.