and fill your background layer with black (choose black as your foreground color from the color chooser) and alt backspace to fill the layer with black.

Now create a new blank layer from the new layer icon (the second from the right) on the bottom of the layers palette. Grab your marquee selection tool and create a rectangle that covers a large portion of the document. Now switch your foreground color to white (D, X toggles between white and black). The color you see in the front is your foreground color in the toolbar.

Now fill this selection you’ve made (on it’s own layer) by pressing alt backspace (or using the paintbucket).

After your white color fill of this selected space, the marching ants (selection will still be there); go ahead and go to go Select: Modify: Contract Selection (Alt/Opt S, M, C). Now enter 20. Press OK. Your selection will now be contracted by 20 pixels.

Now choose Subtract from Selection from the options bar and create the selection as shown to ‘subtract’ from the current selection. You want to leave the bottom portion open because this is going to look like a Polaroid picture.

Go ahead and fill this layer with a light grey (alt backspace after choosing the color from Swatch palette). This differentiates it from the white background. Now you have a fill layer that can act as a clipping group base.

Go to your file: browser and choose an image or two that you want to use for your Polaroid style picture.

After you have opened these documents switch to the moVe tool (‘V’) and drag them into the design. Use Ctrl T and Shift to scale them down to a manageable size if necessary. You want them slightly larger then the grey fill layer because we are going to place them inside this layer.

Make sure that this new layer you’ve imported is directly on top of the grey fill layer in the layers palette. Now go to Layer: Create clipping group (or mask in CS). You can also use Ctrl G or another 'secret' method taught in the Basic Photoshop training here.

Also drag in your other photo option with the moVe tool. Edit: Transform: Scale this down to size and create another clipping group or mask. It’s ok if this layer is directly on top of the previous layer (photo) because it will ‘join’ the clipping mask.