In a large mixing bowl, combine the powdered sugar and egg whites. If using meringue powder, mix it with water first before adding to powdered sugar.
Using a hand mixer or stand mixer, beat the mixture on low speed until it is well blended.
Gradually increase the speed to medium-high and continue mixing for about 5-7 minutes, until the icing forms stiff peaks. To check for stiffness, dip a spatula into the icing; it should hold its shape.
Add in the lemon juice and vanilla extract, and mix for another minute until fully incorporated.
If using food coloring, divide the icing into small bowls and mix in desired colors. Adjust the color intensity by adding more or less until you reach the desired hue.
If the icing is too stiff, you can thin it down with a tiny amount of water. If it's too runny, add a little more powdered sugar until you achieve the desired consistency for flooding or outlining.
Decorate your sugar cookies, allowing for some time between flooding and outlining if using the two methods.
Notes
Adjust the consistency as needed for flooding or outlining.