Use the Right Copy
Your employer will provide you three or four copies of your W-2. Attach the one that says "Copy B - To Be Filed With Employee's FEDERAL Tax Return." "Copy 2" of the W-2 goes with your state tax return and city or county return if you face a local income tax. The IRS advises that you keep your Copy C for three years, or until you start receiving Social Security benefits so you can answer any questions about what you were paid in a given year.
The Right Placement
Attach your W-2 to the front of the return at the line on which you report your wages and salary -- Line 7 on Form 1040 or Form 1040A and Line 1 on Form 1040EZ. The IRS's instructions don't specify a method, but stapling the W-2 to the return reduces the risk that it will be lost or separated from the return. Do not staple the W-2 or anything else to the upper-right hand corner of the first page, an area that is for the IRS's use only.