Step 1. Open the image you would like to apply the polaroid effect.
- check the layers pallette and make sure that the image is not locked in as a background

- if it is locked in as a background, make it a layer. Left click your mouse twice while holding the alt key

Step 2. Create a new layer - click Layer -> New -> Layer - shortcut -> Shift+Ctrl+N

- you should have a Layers like this

Now drag Layer 0 towards up above Layer

Step 3. Canvas the size of the image. - click Image -> Canvas Size

- apply these settings - width 120 percent - height 120 percent

- you should come up with something like this

Step 4. Add more spaces below the image. Canvas the size of the image again. - click Image -> Canvas Size

- apply these settings - width 100 percent - height 130 percent - click on the upper middel box of the Anchor area

- the image should come up something like this

Step 5. Fill background with color white - select background layer. (Layer 1)

- click Edit -> Fill - shortcut -> Shift+F5

- apply these settings - select Color under Use area

- enter hex value of white which is FFFFFF

Step 6. Link Layer 0 and Layer 1 - click the box beside the layer image on Layers Pallette

Step 7. Merge linked layers - click Layer -> Merge Linked - shortcut -> Ctrl+E

Step 8. Canvas the size of the image. - click Image -> Canvas Size

- apply these settings - width 150 percent - height 150 percent

- you should come up with something like this

Step 9. Create a new layer - click Layer -> New -> Layer - shortcut -> Shift+Ctrl+N

- you should have a Layers like this

Step 10. Fill background with color white - select background layer. (Layer 1)

- click Edit -> Fill - shortcut -> Shift+F5

- apply these settings - select Color under Use area

- enter hex value of white which is FFFFFF

Step 11. Load selection "Layer 0" - select Layer 0

- click select -> Load Selection

- when load selection box pops up, click OK

- you should come up with something like this

Step 12. While the selection is still loaded, add a border. - click Edit -> stroke

- apply these settngs - width 1px - color black - location -> Outside

- deselect - click Select -> Deselect - shortcut -> Ctrl+D

Step 13. Distort the image - click Filter -> Distort-> Shear

- apply these settings - drag the line a bit to your left - select Repeat Edge Pixels

- you should come up with something like this

Step 14. Load selection "Layer 0" - select Layer 0 - click select -> Load Selection

- when load selection box pops up, click OK

Step 15. select Gradient Tool. - shortcut -> G

- select foreground to transparent option

Step 16. Apply a little gradient to the image from your upper top right corner going accross down to your left

Step 17. Apply again a little gradient but this time from you lower left corner going up accross to your right

Step 18. Deselect - click Select -> Deselect - shortcut -> Ctrl+D

- you should have something like this

Step 19. Add drop shadows - click Layer -> Layer Style -> Drop Shadows

- apply these settings - Opacity 50% - Angle 120 - Distance 10 - Spread 5 - Size 10

Step 20. Rotate the image - click Edit -> Transform -> Rotate

- apply this setting - angle 15

Now you have a polaroid effect like shown below.
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