Smart object issue

Howdy ! I just created a psd file earlier. It was built with various layers and 1 smart object layer (with a linked layer mask- see screenshot.)

Trouble is, when I try to edit the smart object it opens up as a jpg file instead of psb file. Can I do something to this project (other than building it again from scratch) so that the smart object will open as a psb file?

 

Thanks !

By @defaultre3cnoytc0g3

I will try to give you some info on what is happening. When you have linked Smart Object it will open original file in whatever format it is saved. What you see on layer in Ps document (with linked smart object icon) is image or pixels created from original file. Editing and saving will save changes back to original file so you are editing original on your hard drive. After saving Photoshop will recreate layer (with linked smart object icon) from original file.

When using Embedded Smart Object, Photoshop will duplicate original file and save it in document you are working on. Layer in Ps document with embedded Smart Object icon wuill be created  from that, embedded (duplicated) file without any connection to original file. Editing will open embedded file and save changes back to that file (embedded duplicated original file) without changing original. Layer in Ps document (with embedded smart object icon) will be recreated from embedded file.

@defaultre3cnoytc0g3 

Although it is already a smart object, it retains the JPEG, use the "convert to smart object" command again and it will then open as a .psb file (yes, this is unintuitive). You will need to re-apply the layer mask, so you may need to save this as a selection or alpha channel to reapply afterward as the mask.