I had trouble getting w3tc to leverage browser caching, so I disabled browser caching in the w3tc settings and added the following to my .htaccess file (this only works for Apache servers that allow mod_expires – I use Bluehost, and they allow it).
## EXPIRES CACHING ##
<IfModule mod_expires.c>
ExpiresActive On
ExpiresByType image/jpg "access plus 1 year"
ExpiresByType image/jpeg "access plus 1 year"
ExpiresByType image/gif "access plus 1 year"
ExpiresByType image/png "access plus 1 year"
ExpiresByType text/css "access plus 1 month"
ExpiresByType application/pdf "access plus 1 month"
ExpiresByType text/x-javascript "access plus 1 month"
ExpiresByType application/x-shockwave-flash "access plus 1 month"
ExpiresByType image/x-icon "access plus 1 year"
ExpiresDefault "access plus 2 days"
</IfModule>
## EXPIRES CACHING ##
There is an explanation of what this does on the
GMetrix site. Adding this to my .htaccess file increased my “Leverage browser caching” score on Google Page Speed from 14% to 100% and my overall score from 86% to 98%.