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PSD is the default file format for Photoshop but saving in TIFF can have benefits. TIFF files are more compatible with other design programs. TIFF files can be opened using various software, unlike PSD. In emergency situations when Photoshop is unavailable, TIFF can be more accessible. TIFF files are smaller in size compared to PSD, allowing for easier sharing. Sending a TIFF file is more convenient than a PSD file due to its size.