1. Preheat the oven to 350°F and line a muffin tin with cupcake liners.
2. In a mixing bowl, whisk together flour, baking powder, and ground nutmeg.
3. In a separate bowl, beat butter and sugar until light and fluffy.
4. Add eggs one at a time, mixing well after each addition.
5. Stir in vanilla extract and rum extract for additional flavor.
6. Gradually add the dry ingredients, alternating with eggnog, mixing until just combined.
7. Fill cupcake liners about two-thirds full with the batter.
8. Bake for 15-20 minutes or until a toothpick inserted in the center comes out clean.
9. Allow the cupcakes to cool completely before frosting.
10. For the frosting, beat butter until creamy.
11. Gradually add powdered sugar while mixing until smooth.
12. Pour in eggnog and continue mixing until the frosting is fluffy.
13. Pipe or spread the frosting onto the cooled cupcakes.
14. Sprinkle ground nutmeg over the frosted cupcakes for extra flavor.
15. Optionally, decorate with festive sprinkles or a cinnamon stick.
16. Store the cupcakes in an airtight container for up to 3-5 days.