Are two UPS modules necessary to do this?

This is my current set up:

Free Shipping - "continental US zone + no tax". (Tied to all U.S. states but mine, and used for out of state orders.)
Flat Rate Shipping (Set to $0) - "continental US zone + state sales tax" for in state orders. (Tied to my state)
Per Item - (Set to $10 per item) - Tied to AK and HI only.

Now, for the question, I want to add UPS for 2day shipping and Next Day Shipping.... Do I have to install it twice? Do 1 ups shipping module for my "US In state" zone, and setup the duplicate one for the "US. Out of state" zone?

Or can I use just 1 UPS module and have it calculate the tax correctly for orders in my state?

Thanks!

Although they both use Geo Zones to determine geographic applicability, you need to create one set of Geo Zones for your Tax Classes to use and another set of Geo Zones for your shipping modules to use.

If you have a very simple case, here's what you will end up with.

You will have one "My State Sales Tax Geo Zone" that includes only your state. Your "My State Tax Class" will include "My State Sales Tax Geo Zone" as its only Geo Zone. You will also assign "My State Tax Class" to each Product in your store that is subject to tax in your state, and will leave this entry empty for any Product that is not subject to tax (such as clothing in New Jersey).

You will have one "Continental US Shipping Geo Zone" that includes the 48 states and the District of Columbia. You will configure your shipping module(s) to include this Geo Zone as being applicable to the shipping method.

When a customer places an order his Shipping Address will be examined by OpenCart. First, OpenCart will look for all intersections of "Taxable Product" and "Taxable Geo Zone" and will calculate tax upon that Product. Then, OpenCart will look through your active shipping modules and will offer the customer the choice of all shipping methods that include the customer's Geo Zone in their configuration.

Once you have this set up it is all automatic.

So are you saying I just need 1 ups shipping module that is configured with a geo zone of "my state with tax"?

You just need 1 ups module and you set the tax class to your state's tax class. Leave geozone set to all. The geozone setting in shipping extensions is used for determining whether or not the module is visible to some locations. Not related to taxing.

Ah, that takes care of my UPS issue.

Now, about my current setup.. I cant nessessarily get rid of my $0 flat rate shipping and just keep my free shipping one, because if I show it to all geozones, than people in HI and AK would get free shipping... Is that right?

You can create a geozone called "US-Cont"
Then add the 48 states to that geozone
Then in the free shipping module choose Geozone US-Cont

then people from Hawaii and Alaska won't see the option

Thats what I am doing now I think, I listed my current setup in the original post, but doesn't that require the use of a second free shipping module because one is used for in state taxes, and one is not?