For a transparent background the image needs to be the exact size mentioned below. When WordPress crops an image it gets saved as a .jpg, removing transparency. To work around this edit the functions.php file by visiting the Editor option under the appearance menu. Look for the following code about 4/5 of the way down.
define( 'HEADER_IMAGE_WIDTH', apply_filters( 'header_image_width', 505 ) );
define( 'HEADER_IMAGE_HEIGHT', apply_filters( 'header_image_height', 150 ) );
Edit the width and height to fit the image you wish to use. Use 505 or less for the width. BE CAREFUL, and if you accidently break your site,
follow these instructions. After saving the changes you can upload your file and maintain transparency.
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