Open Photoshop and create a new document. File>new. Create wth size 5 x 7 inches (1500 x 2100 pixels), resolution 300 with a transparent background.
ctrl j to duplicate the layer
Using the rectangular marquee choose fixed size, enter 4.5 x 5.5 inch and click on page to draw a 4.5 x 5.5 inch rectangle in the center of the background. While it is still selected, Go up to Layer>New fill layer fill > solid color click ok. choose white.
Click on the fx effects button on the bottom of the layers pallet and choose Gradient Overlay: set Blend mode to normal check dither, Opacity to 35 %, Style Linear, check align with layer box, set Angle to -42 degrees, Scale to 100%, method classic.
Click on the fx effects button on the bottom of the layers pallet again and choose Drop Shadow Layer Style: set Blend Mode to Multiply, Opacity to 60%, Angle to 120 degrees, check use global light, distance 15 px, Spread 5%, Size 15 px. For quality make sure Noise is 0 and check box for Layer Knocks Out Drop Shadow.
Use the rectangular marquee again choose fixed size, enter 3.75 x 3.75 inch and click on page to draw a square rectangle in the center of the rectangle that you drew in step 3. While it is still selected, Go up to Layer>New fill layer fill > solid color click ok. choose white.
While that layer is active, Click on the fx effects button on the bottom of the layers pallet and choose Inner Shadow with the following settings: Blend Mode: Multiply Opacity 20%, Angle 120, checkbox use global light, distance 0 px, choke: 5%, Size 40 px, noise 0%.
Your frame is done! To see what it looks like with a picture inside here is what to do next.
Choose an image in Bridge and drag it on top of the frame you made. Make sure the new image is above the square layer you just made in the previous step.
With the image layer selected click on the hamburger menu in the top tight of the layers pallete. Choose create a clipping mask.
Save the Polaroid as a Photoshop file to keep the background transparent and swap photos in and out of your frame.
Save the final image polaroid as a PNG, to ensure the edges around the polaroid stay transparent, and the drop shadow remains whereever you post it. When you save to jpeg the sides will be white.