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1. In a medium bowl beat butter with an electric mixer on medium to high speed for 30 seconds. Add granulated sugar and the 1/2 teaspoon almond extract. Beat until combined, scraping sides of bowl occasionally. Beat in as much of the flour as you can with the mixer. Using a wooden spoon, stir in any remaining flour. Cover; chill about 1 hour or until dough is easy to handle.
2. Preheat oven to 350 degrees F. Shape dough into 1-inch balls. Place balls 2 inches apart onto ungreased cookie sheets. Using your thumb, press an indentation into the center of each ball. Spoon about 1/2 teaspoon of the jam into each indentation. Sprinkle with coarse sugar. Bake about 10 minutes or until edges are light brown. Cool on cookie sheets for 1 minute. Transfer to wire racks; cool.
3. Meanwhile, for icing, in a medium bowl combine powdered sugar, 1 teaspoon of the water, and the 1-1/2 teaspoons almond extract. Add enough of the remaining 1 to 2 teaspoons water to make an icing of drizzling consistency. Drizzle cookies with icing.