In a medium bowl, whisk together the flour, sugar, baking powder, and salt until fully combined.
In a separate bowl, whisk together the milk, eggs, and vanilla extract (if using) until smooth.
Gradually add the dry ingredients to the wet ingredients while whisking, stirring until the mixture is smooth. Set aside.
Pour vegetable oil into a medium-sized saucepan, about 2-3 inches deep. Place the saucepan on the stove over medium-low heat and insert a candy thermometer. Ensure the thermometer is submerged in the middle of the oil and not touching the bottom. Heat the oil to 370-375°F (187-190°C).
Once the oil is heated, pour about ⅓ to ½ cup of batter into a liquid measuring cup. Slowly drizzle the batter into the oil in a thin stream, swirling and criss-crossing the batter over itself. Fry for about 90 seconds per side, or until golden brown. Remove the funnel cakes from the oil and place them on a paper-towel-lined plate.
Dust with powdered sugar and serve warm.
Repeat the process with the remaining batter, ensuring the oil temperature returns to 370-375°F between batches.