Transparency is the key. But beware, if your textures are too transparent you can bee banned because it is cheap and misleading ingame. (Like a whole transparent head. AHKK! Where to grab!)
u can use gimp or photoshop.i use gimp. the gimp way:when you get the box saying how big u want it, click on the plus box. then scroll down and click transparency. leave the parts blank that you want to be transparent. happy to help!