There are other methods of course, but this is the one I've been using. I had to reconstruct some of the steps, so if there is a little oddness that's why. I'm also not showing how to do the reflection or complex shadows. There are lots of photoshop and gimp tutorials on how to do that.
First, you'll need a photo that shows a reasonable amount of the side of the truck. The higher the resolution the better. This shot is about the closest to looking at the front of the truck you can get and still use this method.
I used the gimp to do mine.
First, right click on the image in the layers list and add an alpha channel to your image. Not needed if your image is a .png to start with, but since almost all photo's are .jpg's...
Then start cutting the truck out. Use a fuzzy brush for this. The hard edged brushes look strange when you scale the image. It's faster to use a hard edged brush once you have the outline of the truck cut out.
You should end up with something like this. It's a good idea to do any adjustments to contrast/brightness etc now.
Now, make a copy of that layer. Make the original invisible, and scale down the width of the new layer only by 30%. Please note that the width and height are unlocked.
Then scale the layer down, both width and height, by another 20%.
Now, return to your original full sized layer. Cut out just the tires using the same method as above. You'll also need to separate them into there own layers. There are a few ways to do that. One of the easier ways is to highlight what you want, then copy/paste it. Instead of anchoring it though, you right click on the pasted layer and select "new layer".
Stick the tire layers on top of your scaled down truck layer, and position them in the wheel wells.
Now, we have a couple problems. First, is that with the new larger tires we should be able to see the passenger side tire too. To fix that we first make a copy of the driver side tire. Then scale it down by 10%.
Then, we position the new tire layer and place it's layer below the truck body layer.
We are still missing the top section of the tire, so we need to fill in the missing part. Use the color picker tool and grab some of the visible rubber from the passenger side tire. Then use a small fuzzy brush to draw in the missing part of the tire on the layer with the passenger side tire. It doesn't have to be perfect, we are going to scale it way down.
Now we need a shadow. Create a new transparent layer on top of everything else, and draw solid black in more or less where the shadow should go.
Now we need to apply a strong gaussian blur to the shadow layer. The degree of blur you need changes depending on the resolution of the image.
Then, reduce the opacity of the shadow layer to 80% and place it below the rest of your truck/tire layers.
Now we need to fix the tire covering part of the body. Set all of your tire layers to 50-70% opacity and look for places where the rubber shouldn't be visible.
Run a small fuzzy brush along the body and erase any tire you shouldn't be seeing.
Return your tire layers to full opacity. Then crop your image so you have a square with your truck in the center. Make sure to check your brightness/contrast/saturation. With trucks with colored paint it's usually a good idea to increase the saturation of the body.
Make sure to save your image, preferably as a .xcf file so you keep the layers. Then scale down the whole thing to 96x96 for your avatar, and save it as a .png file. You will need to host that file externally, as TW automatically converts all .png files to .jpg. Png files allow partial transparency, .jpg files do not. So .png files make better avatars as you can have a transparent background with a shadow on it. That way you can use it on backgrounds that are different colors and it still looks right.