Set the cream cheese and butter out at room temperature for about one hour so they soften. This step ensures they will blend together evenly and result in a creamy, smooth base for the mints.
In a large mixing bowl, use an electric mixer to cream together the softened cream cheese and butter until the mixture is smooth and creamy.
Add 1 cup of the powdered sugar to the bowl with the creamed mixture and mix until smooth. Then, add the peppermint and vanilla extracts, mixing until they are fully incorporated. Gradually add the remaining powdered sugar in intervals, mixing after each addition, until the dough reaches a Play-Doh-like consistency and no longer sticks to your fingers. The dough will become thick, so you may need to mix some of the sugar in by hand towards the end.
Separate the dough into as many portions as desired for color variations. For each portion, add a small amount of gel food coloring, then knead until the color is evenly distributed. Wrap each colored dough ball tightly in plastic wrap, and refrigerate for one hour to allow the dough to firm up.
Line a baking sheet with parchment paper to prevent sticking. Remove the colored dough from the refrigerator and measure out 1 teaspoon of dough for each mint. Roll the dough into balls and place them evenly spaced on the prepared baking sheet.
Pour 1/2 cup powdered sugar into a small bowl for dusting. Dip a fork into the powdered sugar, then gently press the prongs down on each dough ball to flatten it and create a line pattern. Redip the fork in powdered sugar as needed to prevent sticking while shaping all the mints. I like to be generous with the sugar here to make sure the mints don’t stick to the fork or each other.
Let the shaped mints sit out at room temperature for 4 hours to start hardening, then flip them over and allow them to harden for an additional 2 hours. Once firm on the outside but still soft on the inside, transfer the mints to an airtight container in the refrigerator, separating layers with wax paper or parchment to prevent sticking. The mints will stay fresh for up to two weeks. For parties, you can safely leave them out at room temperature for up to a day.