Two tiny words, and many English speakers don't use them correctly. Maybe they're on drugs. Surprisingly, the one WITHOUT an apostrophe (') is the possessive of it — because it's a possessive pronoun (like his or hers, which have no apostrophe). The other is a contraction of “it is.”
Quick tip: the apostrophe in it's stands for a missing letter. If you can say “it is” or “it has,” write it's. Otherwise its.
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