Form API image preview

Finally I found a solution somewhere on the Internet but forgot to post it here. So now I can only try to remember how is it working (it's now a part of working module, so it works for sure).
NOTE: multifield is the name of the module

/**
 * Implements hook_field_widget_form().
 */
function multifield_field_widget_form(&$form, &$form_state, $field, $instance, $langcode, $items, $delta, $element) {

  //Get the default format for user
  $default_format  = array_shift(filter_formats($GLOBALS['user']))->format;

  $field_name = $instance['field_name'];

  $item =& $items[$delta];

  switch($instance['widget']['type']) {

    case 'multifield_base_widget':
      $element['img1_upload'] = array(
        '#title' => t('Image'),
        '#type' => 'managed_file',
        '#upload_location' => 'public://multifield_images/',
        '#default_value' => isset($item['img1_upload']) ? $item['img1_upload'] : 0,
        // assign #theme directly to the managed_file in other case it won't be
        // rebuilt after file upload
        '#theme' => 'image_multifield_multitype',
      );
  }
  return $element;
}

/**
 * Implements hook_theme().
 */
function multifield_theme() {
  return array(
    'image_multifield_multitype' => array(
      'render element' => 'element',
    ),
  );
}

/**
 * Returns HTML for a managed file element with thumbnail.
 */
function theme_image_multifield_multitype($variables) {
  $element = $variables['element'];

  $output = '';

  $base = drupal_render_children($element); // renders element as usual

  if($element['fid']['#value'] != 0) {
    // if image is uploaded show its thumbnail to the output HTML
    $output .= '<div class="multifield-thumbnail">';
    $output .= theme('image_style', array('style_name' => 'thumbnail', 'path' => file_load($element['fid']['#value'])->uri, 'getsize' => FALSE));
    $output .= '</div>';
  }

For sure it's not copy/paste code but I think it can help somehow if you encounter similar problem.