Take the butter and cream cheese out of the refrigerator in time for them to come to room temperature.
Put the butter, cream cheese, and flour in a larger bowl. Start mixing the ingredients with a fork first. Only when the dough has come together in a homogeneous mass, knead the dough smooth with your hands.
Wrap the dough in cling film and place in the freezer (not the fridge) for 10-15 minutes, but no longer.
Lightly dust the work surface with flour to prevent the dough from sticking to it. Roll the dough into as regular a rectangle as possible to a thickness of ⅛ inch.
Cut the rolled-out dough into squares of approximately 2.½ inches. Place about 1 to 1.½ teaspoons of jam in the middle of each square.
Using a kitchen knife, lift opposite ends of the dough and fold them one by one over the filling. Finally, press the folded ends of the dough lightly together.
Carefully transfer kolacky cookies to a baking sheet lined with baking paper.
Preheat the oven to 340 °F (170 °C). Place the baking sheet with kolacky in the preheated oven and bake for about 15 minutes until golden.
Immediately after baking, dust with icing sugar and leave to cool.