Preheat your oven to 350°F (175°C). Line two baking sheets with parchment paper or silicone baking mats.

In a medium bowl, whisk together the flour, baking powder, and salt. Set aside.

Using a stand mixer fitted with the paddle attachment (or a hand mixer), cream butter, granulated sugar, and shredded coconut together on medium speed until light and fluffy, about 2–3 minutes.

Add the eggs, one at a time, mixing well after each addition. Then mix in the key lime zest, key lime juice, and coconut extract until combined.

Reduce the mixer speed to low and gradually add the dry flour mixture. Mix until just combined; the dough will be thick and slightly sticky.

Place the powdered sugar in a shallow bowl. Using a #40 cookie scoop (about 1½ tablespoons of dough), scoop and roll the dough into balls, then coat each ball generously with powdered sugar.

Arrange the coated dough balls on the prepared baking sheets, spacing them 2 inches apart. Bake for 9–11 minutes until the cookies are puffy and the edges are firm but not browned.

Allow the cookies to cool on the baking sheet for 5 minutes before transferring them to a wire rack to cool completely. Store in an airtight container.