1.) Open a new image 500 x 550

 

2.) Grab your Square selection tool and make a rectangle like so

 

 

2.) Fill with white

 

3.) Drop shadow

 

4.) Inner shadow

 

5.) Color Overlay #ffffff

 

6.) Now grab your square selection tool again..

and select like this.

 

7.) Now go up to edit/ cut

 

Now your ready to insert your favorite picture!!!