Step 1: Fold #1: right triangle
This first fold is easy. Fold the upper portion so that you have a 45 degree fold. The image shows the fold for making a left-handed handle. (Mirror-image it for a right handed handle.)
Step 2: Fold #2: handle slope
Step 3: Fold #3: tucking the over-hang
If folded properly, the handle should be fairly secure, and will permit you to hang the bag on hooks, on your fingers, etc. Now, you don't have to clutch your take-out bag like a burlap sack.