If you’re one of those who often confuses ITS and IT’S, don’t feel bad. Even the pros get it wrong from time to time.
It may further comfort you to know that today’s rule — no apostrophe in the simple possessive ITS — has not always been the standard.
According to Merriam Webster’s Dictionary of English Usage (1994), the non-apostrophized form did not come into favor until the 1800s. “The possessive pronouns were a complete muddle in the 18th century,” the guide laments, noting that Thomas Jefferson and Jane Austen used IT’S for ITS.
We are in the 21st century, however, and we are neither Thomas Jefferson nor Jane Austen. (I’m not, anyway.) The matter is settled.
Just as HERS and THEIRS are simple possessives that do not need an apostrophe, IT’S is not the possessive of IT.
IT’S is a contraction of IT and IS.
I don’t know of any rules of thumb to help you keep this straight.
IT’S just the way ITS is.