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PSD and TIFF are file formats for Photoshop files, but TIFF is often more compatible with other graphic design programs. TIFF files can be opened in various software, while PSD files may only work in specific ones. TIFF files are also much smaller in size compared to PSD files, making them easier to share and modify quickly, especially in emergencies. Compressing TIFF files maintains their quality, unlike PSD files. Consider using TIFF files for easier collaboration and storage efficiency.