Let me reply with a similar question about your native language: When you hear the word "shì" in a Chinese sentence, how do you tell whether it is 是 (to be) or 事(matter) or 市 (market) or 式 (style) or 世 (lifetime) or 士 or any other of the countless homonyms that exist in your language. The answer is probably the same as for your question: Context! The first of my examples is a verb while the others are nouns, so you will find it at a different position in the sentence. And then there are different words that usually go along with "shì", so this will be a clue, too.
Same thing with "morgen" and "Morgen": You have to recognize which of the two words appears in which context. The fact that one of them is a noun and the other is an adverb will help you a lot in this.
And by the way: When "morgen", which is usually written with a small m appears as the first word of a sentence, it is of course written with a capital M, and it still means "tomorrow". And this happens a lot. So your rule of thumb also doesn't cover all cases.